The Financial Services Council (FSC) has put forward an objective for superannuation, saying this will help take super policy out of the short-term budget cycle.
The FSC says the legislated objective of superannuation should be:
To deliver dignity and independence for all Australians in retirement by providing replacement income that is adequate to provide a comfortable standard of living.
FSC CEO Sally Loane said the Government should be commended for committing to setting an objective for superannuation.
“Defining super and enshrining it in law was an important recommendation of the Financial System Inquiry and will serve as a yardstick against which all future decisions impacting on our retirement system can be measured,” said Ms Loane.
“It is imperative that superannuation is taken out of the short term budget cycle. Defining the objective of superannuation and making it law should orientate the debate towards the long-term goal of ensuring we have a system which will provide adequate and comfortable retirements for all Australians.”
“Superannuation is a long term intergenerational policy to support Australians in retirement. It is a compulsory system so it must be allowed to deliver on its goal – to enable more Australians to self-fund their retirement and to decrease pressure on the public purse.”
“The age pension system, which costs $44.7 billion each year and rising by seven per cent annually, will never be able to deliver comfortable retirements for Australians in an aging society.”
The FSC objective does not mention the age pension, unlike the objective suggested by the Financial System Inquiry:
To provide income in retirement to substitute or supplement the Age Pension.
“Taxpayer support for super must be consistent with the objective of more Australians being able to independently fund their retirements,” said Ms Loane.
“We should focus on middle Australia, the vast bulk of our population, and those with the greatest capacity to reduce their reliance on the age pension.”
“By cushioning future generations against the cost of an aging population, it is more likely the living standards we enjoy today will also be enjoyed by our children.”
The FSC also recommends that the objective for superannuation be enacted in separate legislation, “rather than through existing superannuation law”.
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