CA ANZ, the IPA and the IFPA said they did not support the government’s proposed objective or the need to legislate it.
In a joint submission, they said superannuation law already contained an objective in the sole purpose test.
“The sole purpose test is a key compliance mechanism used to determine if a superannuation fund should be permitted to access the superannuation tax concessions,” it said. “In effect, it details the government’s policy objective for superannuation.”
The three associations said legislating an objective for the superannuation system in isolation would fail to assist anyone, including the government.
“We have concluded that it would be better for the government to create an objective for the whole retirement system,” the submission said.
The government’s consultation paper said enshrining an objective for super into law would anchor future policy settings and reduce inconsistent changes, but the three bodies said the proposed legislation was unlikely to achieve that goal.
“We would welcome anything that ensures that future superannuation policy changes will not continue to be made on a haphazard and inconsistent basis. We do not think an enshrined objective of super will be the missing piece of this puzzle,” the submission said.
The submission also highlighted the role of tax concessions in super and stressed that the current policy settings ensured that tax benefits were removed from bequests to non-dependents.
“The government will need to indicate if it intends to change any of these important policy settings based on the proposed wording,” the submission said.
“The tax concessions are vital to ensure superannuants are able to build sufficient wealth for their retirement. These concessions also act as an important incentive for individuals to choose to defer immediate consumption so as to save for their long-term retirement needs.”
The professional bodies also questioned why superannuation was taxed differently for different individuals when home owners were not.
“Given one important retirement element (home ownership) is treated in the same way for all individuals, regardless of their circumstances, why must different rules apply to superannuation so that its tax concessions are ‘targeted at where they are needed most’?” the submission asked.
“Tax concessions attached to home owners can be, in many cases, significantly higher than their superannuation concessions. This oversight is at odds with one of the intended policy justifications for legislating the objective of superannuation.”
“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 way inflation is running at the moment even balances over $3m in today’s money will likely need government support.