Aaron Dunn, CEO of Smarter SMSF, said he believes that ultimately the government is moving into “election mode” and although the Division 296 tax did not get passed this year, the objective of superannuation will give the government a positioning point against the coalition’s policy of allowing people to use their superannuation for expenses such as housing.
The passage of the Superannuation (Objective) Bill 2023 enshrines the objective of super being “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
“The way I read it is that the concept of preservation remains central to superannuation, therefore if the Coalition is talking about using super for things such as housing, the government would push an approach that would be against the current law,” Dunn said.
“The objective is all about preserving savings for a dignified retirement and that is where the result of this may lie.”
However, Dunn said nothing in the bill that creates a binding to the courts or tribunals and is more akin to a statement of compatibility.
“If you go back to the fact that it will be used in the context of the government pitching where it will be in terms of superannuation against the coalition and back to the concept of equity in making sure savings are proportionally allocated, there is the opportunity to pare back tax where appropriate like with Div 296,” he said.
“It comes back to how much concession will be made available around super and do they target particular areas again. The bill reinforces enshrining to provide ‘true north’ to policymakers. To me, this seems like the stake in the ground from an election standpoint.”
SMSF Association CEO Peter Burgess said the scrutiny and rigorous assessment of the measures was a positive.
“We would like to think the passing of this bill will see the government now reconsider their proposed Division 296 tax,” he said.
“It is difficult to see how taxing unrealised capital gains, and introducing further unnecessary complexity is consistent with the principles of fairness, equity and sustainability that underpin the now legislated objective of super.”
Association of Super Funds of Australia CEO Mary Delahunty said the passage of the bill was a significant milestone for Australians’ retirement security.
“ASFA is very pleased to see the passing of this law that will codify what Australians have come to love about superannuation over the last 30 years – that it is their nest egg designed to assist them to achieve a dignified retirement,” Delahunty said.
She continued that the bill would ensure preservation remained a cornerstone of superannuation.
“Preservation is the foundation of trust in superannuation,” Delahunty said.
“It ensures that when Australians engage with the system, their contributions are protected for their retirement. It’s this principle that underpins the integrity of super and enables it to deliver the outcomes members and the nation rely on.”
The bill introduces a requirement for policymakers to produce a statement of compatibility for any proposed changes to superannuation, reinforcing long-term stability and ensuring reforms are measured against a guiding purpose.
“Australians need to know their superannuation is safe from the winds of political change,” Delahunty said.
“This legislation sends a strong signal that the system will remain focused on delivering for members, now and into the future.”
Delahunty welcomed the bill’s focus on equity and sustainability, noting “The objective’s focus on equity ensures that superannuation delivers fair outcomes for all Australians, including women and low-income earners, while sustainability guarantees the system can meet the challenges of an ageing population and evolving workforce.
The Super Members Council of Australia said the legislation would be “a guiding light for all future policy development in super” and strengthen certainty and predictability for all Australians who rely on super to deliver retirement income.
SMC CEO Misha Schubert said the objective’s wording reflects the views of everyday Australians.
“Ask everyday Australians what super is for, and they’ll tell you it’s their money for retirement,” she said.
“The Objective of Super legislation reflects that clear and compelling purpose in ironclad law. It will be a guiding light for all future super policy development.”
“We strongly support the legislation. It will help to ensure super stays strong and secure – and continues to deliver a financially secure retirement income stream for millions of everyday Australian retirees.”
An agreed objective of super in law would support more stable, effective and equitable policy settings and reinforce the strong system fundamentals needed to evolve the system, she said.
“Importantly, the bill safeguards super’s preservation policy – the key policy principle that the purpose of super is to deliver retirement income – in legislation.”
“And it reminds the current and future parliaments that any policies that undermine preservation are contrary to the purpose of super.”
