Treasury has now released a consultation paper, titled Legislating the objective of superannuation. You can access it here.
The government is seeking feedback on the following proposed objective:
The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
The consultation paper also provides definitions for each of the terms outlined in the objective.
Preserve savings is defined as restricting access to superannuation savings for a person’s retirement only.
Deliver income refers to providing income in retirement while dignified denotes the importance of financial security and wellbeing in retirement.
Government support under the objective is intended to “encapsulate and highlight the superannuation system’s interaction with the Age Pension pillar as well as other government support”.
Equitable and sustainable signifies that the system should provide similar outcomes for people in similar circumstances and government support should be target to those in need.
“Superannuation also needs to fit with the broader fiscal strategy,” the paper explained.
The consultation paper has also proposed two alternative objectives:
- The objective of superannuation is to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
- The objective of superannuation is to support savings to deliver income for a dignified retirement, in an equitable and sustainable way.
The consultation paper stated that legislating the objective of superannuation will provide stability and confidence to policy makers, regulators, industry, and the community, that changes to superannuation policy will be aligned with the purpose of the superannuation system.
“It will also ensure members and funds have a shared understanding of the purpose of superannuation throughout both the accumulation and retirement phases,” it said.
The government is seeking stakeholder feedback on the framing of the draft objective of superannuation, including the benefits of the objective and its practical application. The consultation ends 31 March.
Before an ‘objective of superannuation’ is legislated, could Treasury/Jones/Chalmers, explain what is deficient with s62 SISA in providing the “why” a superfund is maintained?
Core purposes = provision of benefits in respect of retirement, reaching preservation age, death.
Ancillary purposes = disability benefits and broader death benefits PLUS “the provision of such other benefits as the Regulator approves in writing”.
s62(b)(v) is the provision that is used to expand super into far flung reaches such as housing and COVID early release. This needs nailing down.
The paper states the legislated objective could be provided in SISA, which provides some support for the concept of looking at what is there and seeing if modifications will bring the existing law up to date, rather than embedding more complexity.
An Act dated 1993 is in need of review if we want super to move through the generations and continue to provide robust support for our fantastic system. Instead, the Tax law has been the legislative basis for most of the amendments affecting super.
I don’t however expect this to be a part of SISA as it is clear the government’s objective here is to create a ‘mandate’ to enact their particular policy objectives.
The inclusion and emphasis of the words ‘income provision’ is the key to where this is heading.