Government vows to end the super wars
The government has released a draft objective for superannuation to deliver sustainable retirement income.
The proposed objective, which is open for consultation, is to preserve savings to deliver income for a dignified retirement, with government support, in an equitable and sustainable way.
The consultation recommends that the proposed objective of super be established in legislation, to provide stability and certainty for regulators, policymakers, and government. This will promote transparency and accountability in policy development, ultimately strengthening the community's trust in the super system, benefiting both members and funds, it said.
At an industry event, Treasurer Jim Chalmers says the government is going to end the super wars and ensure future changes to the system are aligned with its objective.
Chalmers chastised the previous government for "disastrous policy proposals" which allowed billions to be withdrawn from balances during the pandemic.
"Our predecessors were navigating the super landscape without a compass," he says.
"This made us vulnerable to wrong turns and wrong decisions. It moved us further away from where we need to be - better living standards in retirement for as many Australians as possible.
"Legislating super's objective will change that because for the first time we'll have a true north - a shared goal that we can work towards together."
Chalmers added that the new objective doesn't preclude super funds from investing in nation-building projects that benefit the broader economy.
"Those opportunities to achieve a double dividend - good results for super funds and members and good results for our nation - can only enhance the ability of super to meet its core objective," Chalmers says.
"That's because a strong economy, and a strong society, is necessary to future-proof super - to protect its capacity to deliver strong member returns in the 2020s and beyond."
ASFA endorsed the government's proposed objective of super as an inflection point in the evolution of Australia's "world-class" retirement income system.
"The proposed objective places preservation, retirement income, equity, sustainability and a dignified retirement at the heart of superannuation policy while recognising the ongoing role of the Age Pension," says ASFA chief executive Martin Fahy.
"This objective offers a retirement aspiration which is fit for purpose, and worthy of our commitment to a future where all Australians can face into retirement with confidence."
The government's proposed objective for super is expected to bring much-needed policy stability and help guide future policy debates towards maintaining an affordable age pension, preserving retirement savings, and promoting equitable outcomes for women and low-income earners, Fahy added.
The Financial Services Council (FSC) also welcomed the government's consultation on a proposed definition and objective for the super system.
FSC chief executive Blake Briggs says: "The FSC supports the government's commitment to legislate an objective for the superannuation system as a priority and recognises the final objective must reflect the expectations and aspirations of everyday Australians."
"An objective of superannuation will help drive the focus of policy reform to address systemic issues, such as including superannuation contributions on Government paid parental leave to help close the gender gap where women retire with 18 per cent less superannuation than men."
But, looking ahead, Briggs emphasised the need for a thorough examination of the proposal to confirm that it sets the right framework to prevent policy changes that could erode confidence in the super system.
Meanwhile, HESTA welcomed the government's proposal to legislate an objective of super, commending it for highlighting the importance of equity, preservation, sustainability, and dignity in retirement.
"This represents an important fork in the road for our super system, which is world leading, but has a persisting gender-blind spot," a HESTA spokesperson says.
"The consultation period is an opportunity to come together and shape a stronger super system now, and for generations to come."
Insignia Financial chief executive Renato Mota commented: "Australians need security and confidence as they save for retirement, and we welcome the government's proposal to legislate the objective of superannuation.
"Superannuation policy should be aligned and focused on delivering sustainable outcomes through members' working lives in support of their retirement.
"We look forward to a future where superannuation is meaningfully embedded in enhancing the financial wellbeing of all Australians, allowing them to enter retirement confidently."
Although the proposed objective received praise from industry groups, Liberal politician Stuart Robert argued that it prioritises the interests of funds over individual Australians.
Robert suggested that allowing Australians to use their super to buy their own homes is a more "dignified" use of their funds, rather than have super funds use the money to buy properties that individuals then rent.
He also claimed that early access to super can be a dignified solution for those facing financial difficulted due to medical needs or unemployment.
The consultation is open until March 31.
Get stories like this in our newsletters.