The superannuation objective Bill should not be delayed to “serve the vested interests” of the superannuation industry, Grattan Institute CEO John Daley has told a Senate committee.
Mr Daley told the committee, which is conducting an inquiry into the Superannuation (Objective) Bill 2016, that the Bill should be passed as drafted. The Grattan Insitute is supportive of the proposed objective, which links superannuation to the age pension. The superannuation industry have called for the objective to be changed to include concepts such as adequacy.
Mr Daley noted that the Bill had caused a lot of discussion, suggesting this was because “it has crystallised a number of attitudes and assumptions that people have that may not be accurate.”
He told the committee that these assumptions included that superannuation should be at the centre of retirement incomes policy, that retirement incomes should be at the centre of lifetime income policy and that retirement incomes should be at the centre of budgetary planning.
“Finally, there is the idea that people should have a very straightforward view of how they organise their life. Clearly none of those things are in fact true,” said Mr Daley.
“Firstly, super is not at the centre of retirement incomes. I can understand why those in the superannuation industry find this a difficult message. It is clearly true that for the foreseeable future the age pension will be worth more than super, in effect, for most households.”
Mr Daley also took aim at ASFA’s ‘retirement standard’, saying it represented an “affluent standard of retirement” that most Australian households will not be able to achieve.
“So, not surprisingly, the only way that Australian households could achieve that level of standard of living during their retirement is to live a life during their working life that is materially less than comfortable.”
“Super is not a magic pudding. If you are going to have a lot more money after retirement, then, by definition, you are going to have to have less money before retirement.”
“Super can help to increase incomes in retirement, but it is inappropriate to expect that super by itself can deliver adequate incomes. It is inappropriate for super to try to deliver comfortable incomes because indeed pretty much any policy settings will fail to do so. And it is inappropriate to aim for it to deliver an adequate standard of living for all people.”