The majority of a Senate committee inquiry into the Superannuation (Objective) Bill 2016 has recommended its passage, though with reporting as part of the Intergenerational Report.
Much of the debate over the Bill had been on the wording of the objective. The committee found there was no consensus on alternative wordings and so is sticking with the original wording: “The primary objective of the superannuation system is to provide income in retirement to substitute or supplement the age pension.”
“While the overwhelming view of stakeholders supported the notion of enshrining a legislated objective for superannuation, the committee notes that stakeholders had different views on the proposed wording and the meaning of those words. There was no consensus position for the introduction of subjective descriptors,” says the majority report.
“The committee therefore considers that the objective as drafted will enhance the stability of the superannuation system by creating a clear framework for assessing superannuation policy.”
The superannuation industry had been calling for the objective to be expanded to include issues of adequacy, but this was rejected by the majority of the committee.
“The committee does not consider that either a relative or absolute level of retirement income should be included in the primary or subsidiary objectives. Indeed, the subjective nature of terms such as ‘adequacy’, ‘comfort’ and ‘dignity’ have the potential to undermine the successful implementation of an objective for the superannuation system by focusing on retirement incomes as a whole. While there may be merit in striving to set an objective for the entire retirement income system, this is the not the purpose of the bill under consideration by the committee.”
It is noted in the report that a number of stakeholders thought the subsidiary objectives should be included in the legislation in order to be effective, rather than in regulation. However, this too, was rejected by the committee.
“Prescribing the subsidiary objectives through regulation is an appropriate way of ensuring that these objectives remain subsidiary to the primary objective while still contributing to a comprehensive framework for assessing changes to superannuation policy.”
“The committee is confident that the measures requiring future policy changes to be supported by statements of compatibility will provide a robust mechanism by which these proposals can be evaluated and will be a valuable tool in contributing to the public debate.”
However the committee does consider it “appropriate that the compliance of future superannuation reforms with the legislated objective be periodically assessed and reported on as part of the Intergenerational Report”.
The Labor members of the committee issued a dissenting report, which recommends the Government withdraw the Bill and undertake further consultation.
“Labor Senators recommend that the Government go back and consult further with stakeholders with a view to developing an objective which has stronger stakeholder support.”
“Labor Senators also recommend that the Government meet the recommendation of the Murray Financial System inquiry to seek broad political agreement for the objective of superannuation.”
“Labor Senators are willing to engage cooperatively and constructively with the Government on an objective for superannuation.”