The SMSF Association says that the time is right for objectives for superannuation to be set in legislation, in light of the Royal Commission and Productivity Commission inquiry.
The Financial System Inquiry, which was initiated by the Coalition Government, recommended for broad political agreement be sought on a set of objectives for the super system and for these to be legislated.
The Government agreed with the recommendation, but has been more successful in drafting the legislation that seeking agreement on the objectives. The Superannuation (Objective) Bill 2016 was last debated in the Senate in November 2016.
The SMSF Association, in its 2019/20 pre-Budget submission, says that now is an “opportune time” to set objectives for superannuation, given the Financial Services Royal Commission and Productivity Commission report on the super system.
The Association says a “clear” objective for superannuation will help guide policy.
“The lack of a legislated objective of superannuation is in part responsible for the lack of a holistic policymaking approach to the retirement system and some of the systemic issues uncovered by various Commissions.”
“An objective of superannuation would help drive effective policy and the role of all superannuation funds, industry, retail, profit and SMSFs. In an anticipated year of legislative recommendations, a clear and effective objective will help with the creation of policy.”
“Legislating an objective for superannuation should play a role in clarifying and distinguishing the roles of superannuation and the age pension. This would help remove the possibility that the objective of superannuation could be interpreted so that any income provided by superannuation above age pension level is a sign of overly generous tax concession support for superannuation.”
The issue of ‘adequacy’ in any objectives for the super system, and the resulting implications for tax concessions, has been a key dispute contributing to the stalled progress of the measure.
The SMSFA notes the recommendation of the Productivity Commission calling for a inquiry into the role of compulsory superannuation in the retirement incomes system – a recommendation the Government has yet to accept or reject. However the SMSFA recommends that objectives for super be set before any such inquiry.
“We encourage the Government to consult with the superannuation industry and legislate the objectives of superannuation in 2019,” says the SMSFA.