Govt seeks feedback on draft legislation for super objective

The government is consulting on the Superannuation (Objective) Bill 2023 and Superannuation (Objective) (Consequential and Transitional Provisions) Bill 2023.

In a statement on Friday, Treasury said the draft legislation and explanatory materials reflect the feedback received from stakeholders on the need to legislate the objective of superannuation to provide a shared direction for government, the superannuation industry, and Australians.

“The proposed objective of superannuation is: ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.

“The objective does not alter superannuation trustee’s existing obligations or how members’ money can be invested or accessed but it does serve as a reminder to them of their role in the super system, including to support members holistically during their working life, and their transition to retirement,” the Treasury document reads.

Moreover, it underlined that the draft legislation ensures that future changes to the superannuation system are in line with its objective by requiring policymakers to assess proposed changes for compatibility.

Meaning of dignified explained

According to the explanatory material accompanying the bills, the objective will provide a “shared understanding” of superannuation with a primary emphasis on safeguarding savings to secure dignified retirement income.

“The key concepts within the objective are not intended to be considered in isolation, rather, policymakers will need to consider and make informed decisions on the trade-offs that may be required between the different concepts to ensure that superannuation policy delivers on the broader objective in a cohesive way," the material explains.

Furthermore, the material highlights that the objective does not influence regulatory oversight efforts and, although in alignment with it, remains distinct from trustees’ fiduciary responsibilities.

The accompanying material also delves into the nuanced definitions of key terms such as “preserve savings”, “deliver income”, “dignified”, “equitable”, and “sustainable”.

For example, what is meant by “dignified”, in the context of the objective of superannuation, is “a standard of financial security and wellbeing in retirement which allows the person to participate economically and socially in their community”.

“‘Dignified’ does not mean the same level of income in retirement for all Australians and many Australians will rely on a combination of superannuation savings, government support, and private savings to achieve a dignified retirement,” it continues.

Regarding the use of the word “equitable”, the government explained that its inclusion underscores the recognition that “superannuation policy can exert a distributive influence on Australian society”.

“While equity is a subjective concept, in this context, it captures the importance of a system that delivers similar outcomes to people in similar situations and targets support in the superannuation system to those most in need.”

Last month, Financial Services Minister Stephen Jones said draft legislation to enshrine the objective of super will be put to Parliament within months.

“In coming months, we will release draft legislation for consultation before introducing it to Parliament soon after,” he said at the time.

The government is welcoming submissions until 29 September.