The government has issued a new consultation paper seeking feedback about the benefits, phrasing, and implementation of an objective for superannuation.
Released on Monday, the paper sets out the Albanese government’s proposed definition of the objective, which is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Speaking at an event on Monday, Treasurer Jim Chalmers declared that Labor wants to “end the super wars once and for all”, and vowed to make sure that future changes to the super system are compatible with its objective.
Mr Chalmers reiterated that he has no intention of following in the footsteps of Labor’s predecessors by allowing Australians to access their super early, a decision he attributed to the previous government’s lack of direction.
“Legislating super’s objective will change that because for the first time we’ll have a true north — a shared goal that we can work towards together,” the Treasurer said.
Labor’s proposed questions
In the consultation paper, published Monday, the government announced it is seeking stakeholder feedback on the framing of the draft objective, its benefits and its practical application. Specifically, the consultation paper asks:
- What do you see as the practical benefits or risks associated with legislating an objective of Australia’s superannuation system?
- Does the proposed objective meet your understanding of the objective of the superannuation system in Australia?
- Is the proposed approach to enshrining the objective in legislation appropriate? Are there any alternative ways the objective could be enshrined?
- What are the practical costs and benefits of any alternative accountability mechanisms to the one proposed?
Once pinpointed, the agreed objective would serve as a guide for policy makers, government, regulators, industry, and the wider community, Treasurer Jim Chalmers and Minister for Financial Services Stephen Jones said in an accompanying statement.
“Legislating an objective for super — a Labor commitment at the last election — will give confidence to the super industry and peace of mind to Australian workers that we’ll do everything we can to safeguard their savings to deliver income in retirement,” the pair said.
Key phrases explained
The proposed objective, as outlined in the consultation paper, includes several key phrases which the government outlined in detail, starting with “preserve savings” which serves to emphasise that contributions to super should only be accessed for retirement income purposes, except in exceptional circumstances.
“This recognises that superannuation exists first and foremost as a savings vehicle to fund retirement and not a pool of individuals’ savings to meet other lifetime costs,” the paper reads.
The government has also added the phrase “deliver income” to the proposed objective, stating that the purpose of the super system is to create universal savings that can be utilised in retirement to provide income and support retirees’ standard of living.
“The focus on delivering income makes clear that the purpose of superannuation is not for minimising tax on wealth accumulation or enabling retirees to leave tax-effective bequests,” the government noted.
Furthermore, the paper proposes the inclusion of the term “equitable” to emphasise the importance of a system that provides comparable outcomes to individuals in similar situations and offers assistance to those who need it the most. In addition, the term “sustainable” is supposed to indicate that the system should be able to withstand demographic, economic, and social changes, while also being cost-effective for taxpayers in achieving retirement goals.
“While all Australians can save for their desired lifestyle in retirement, this outcome is influenced by personal circumstances and expectations, and is ultimately constrained by the need for equity and sustainability in the system,” the paper reads.
“Beyond a certain level of income, additional government support through tax concessions is not necessary or appropriate.”
Source of capital
Overall, according to the ministers, there needs to be a greater focus on how the nation’s super system is delivering strong retirement outcomes.
Additionally, the Labor government believes that given super’s significance as a source of capital in the economy, there’s an opportunity to capitalise on this by directing more superannuation investment towards areas where the best financial interests of members align with national economic priorities.
Speaking of this “double dividend” on Monday, Mr Chalmers said there’s opportunities to achieve “good results for super funds and members and good results for our nation”, particularly in areas such as affordable housing, climate, the care economy, and digital.
The government’s consultation will run until 31 March.
