Superannuation bill lacking critical concept, SMSFA warns

The Superannuation (Objective) Bill 2016 was introduced in November 2016 with the aim of establishing a legislative framework to guide the development of future superannuation policy.

In its submission to the Senate economics legislation committee regarding the bill, the SMSF Association said, “Adequacy must be included in the objectives of the superannuation system so that our retirement system maintains its goal to provide people with adequate retirement savings to deliver a ‘financially secure and dignified retirement’.”

“This upholds an aspirational element to superannuation and encourages people to save during their working life to fund a self-sufficient retirement,” the SMSF Association said.

The association acknowledged that including the concept of adequacy in the objectives of superannuation raises certain issues, particularly that there is no current accepted definition of ‘adequate retirement savings’.

These issues could be circumvented by including a subsidiary objective of “providing a secure and dignified retirement” rather than referencing adequacy or a defined level of income to be aimed for in retirement, the association said.

“The subsidiary objectives that should be regulated are: Providing a secure and dignified retirement, managing risks in retirement, be invested in the best interests of members, alleviate fiscal pressures on government from the retirement income system, be sustainable and equitable, maintain a pool of national savings, and be simple, efficient and provide safeguards,” the association said.

Managing director and chief executive of the SMSF Association Andrea Slattery said it is important for policymakers to evaluate future superannuation changes against all of the superannuation objectives, including subsidiary objectives, so that all facets of the superannuation system are appropriately accounted for.

“With a retirement system that is still to mature, the importance of setting these objectives down in law correctly is essential,” she said.

“This is why we are so adamant that the concept of the superannuation system aiming to deliver a ‘secure and dignified’ retirement must be included in the government’s final objectives for superannuation.”