Objective for super critical to protecting retirement savings, says CPA
Defining an objective for super will result in more careful consideration of when superannuation should be accessed in times of crisis, the accounting body has said.
In its pre-budget submission, CPA Australia said Australia’s superannuation system is under pressure from several areas at the moment, including the estimated $35.9 billion withdrawn from superannuation in response to COVID-19, an ageing population, demand for capital, and increasing compliance costs.
“The added pressure of accessing savings designed for retirement comes at a time when the broader superannuation system has been subject to early access measures, which are not generally regarded as retirement-related, such as the early access for people impacted by COVID-19 and the First Home Super Saver Scheme,” the submission noted.
The submission referred to the Intergenerational Report, which noted the increasing risks to national retirement policy through the accessibility of superannuation prior to retirement.
“It’s important that our retirement income system is properly equipped to deal with its purpose — retirement,” the submission said.
CPA Australia said that by defining an objective for superannuation and the retirement savings system as a whole, this would assist in more careful consideration being given to whether superannuation should be accessed in times of crisis.
“A definition could also assist in the design of potentially more appropriate policies to help households respond to future shocks,” the submission said.
The submission pointed out that the retirement savings system also encompasses the age pension, non-superannuation investments, including the family home, and aged care.
“We consider that the formulation of an objective for superannuation and the retirement savings system would assist in determining when policy is at odds with the reason why Australia’s superannuation system exists,” it said.
Treasurer Jim Chalmers said in August this year that legislating the objective of superannuation would be a priority for Labor.
“We see the lack of a legislated objective of super as a source of ambiguity which left the gate open for early access — and so we will legislate one,” he said.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
