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Objective of super goes to Parliament with some industry backing, but concerns linger
The federal government has put its proposed objective of superannuation to Parliament, the next step in a bid to strengthen Australia’s super system through legislation that has generally garnered support from industry groups, although some question remain about its purpose and scope.
Treasurer Jim Chalmers and Financial Services Minister Stephen Jones announced Thursday the tabling of the Superannuation (Objective) Bill 2023. The proposed legislation states that the objective of super is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
“An agreed objective of super will serve as a guide for future governments, regulators, industry and the wider community, instilling greater confidence in the system,” Jones and Chalmers said in a joint media release announcing the bill’s tabling. The statement took the former government to task for allegedly raiding the superannuation system for its own uses, saying a legislated objective for the system “will prevent this from happening again”.
If the objective becomes law, any proposed changes to superannuation legislation would be judged against it, they explained. “This will make policymakers more accountable when considering changes that affect Australians’ retirement savings.”
Chalmers and Jones noted that the objective does not change super trustees’ existing obligations and will not alter provisions around early access to super on compassionate grounds.
The Albanese government first announced its plan to legislate an objective for Australia’s $3.5 trillion superannuation scheme in February, seeking to “end the super wars once and for all”. It ran a consultation on an exposure draft in September; the key language in the bill now before Parliament is unchanged from the exposure draft.
Industry support largely continues
The announcement has drawn broad support from industry groups, including the Australian Institute of Superannuation Trustees, the Association of Superannuation Funds of Australia and the SMSF Association.
CEO Peter Burgess told The Inside Investor after the tabling of the bill that the SMSF Association maintains its support for an objective of super.
“We think it’s a good idea that we all have a shared understanding of what we are trying to achieve and, by making policymakers more accountable when considering changes to the superannuation rules, it will help to build confidence in the super system which is critical when it comes to voluntary contributions and encouraging individuals to contribute more to their superannuation,” he said.
Rest, one of Australia’s largest profit-to-member super funds, issued a statement calling the move positive for its members and predicting a legislative objective will help enhance retirement outcomes and contribute to a fairer superannuation system.
“The objective defined by the government, and the requirement that all future super-related legislation is compatible with the principles of preservation, equity and sustainability, are a positive step forward for our members and all working Australians,” Rest CEO Vicki Doyle said, urging Parliament to pass the legislation “at the earliest possible opportunity.”
However, other critics have emerged of both the need for a legislated objective of super and the form of the objective as proposed. The Institute of Financial Professionals Australia, which expressed opposition to the objective based on the draft exposure, reiterated its concerns following the bill’s tabling.
“In our view, the key words ‘equitable’ and ‘sustainable’ could be a flag post for future changes to the superannuation system,” Natasha Panagis, IFPA’s head of superannuation and financial services, said. “The… wording strongly implies that the sustainability of the superannuation system will be subject to the broader budgetary and fiscal position of the commonwealth at any given time.”
Panagis also said the proposed objective is “loaded with terms that are open to interpretation or manipulation by current and future governments”, freeing policymakers to use the objective to “make the overall superannuation system less generous to individuals planning for their retirement”.
