The SMSF Association has called on the federal government to enshrine the objective of superannuation in stand-alone legislation and not as part of existing super or tax laws.
“The objectives of superannuation will influence a number of policy areas, including superannuation, taxation, social security, health and ageing,” SMSF Association chief executive Andrea Slattery said.
“Accordingly, the objective should be legislated in a stand-alone act rather than in existing superannuation or taxation legislation.”
Slattery said she wanted the government to seek bipartisan support and participate in consultation on the wording of the objective and guiding principles before they became law.
According to the SMSF Association, the legislative process provided a suitable opportunity to remove superannuation policy from the annual budget cycle.
“The Intergenerational Report (IGR) would be an appropriate vehicle for a regular periodic review of the superannuation system to be tied to,” Slattery said.
“Having the IGR released once every five years will allow the government, industry and consumers to take a ‘health check’ on the superannuation system, and stakeholders can assess whether it is achieving its goals and whether any adjustments or changes to policy settings are required.”
The association also wanted its definition of the primary objective of super – “to provide income in retirement to substitute or supplement the age pension, delivering a financially secure and dignified retirement for Australians” – to be enshrined in legislation.
Slattery said it was essential the objective not only had a focus on providing retirement income, but also ensured retirees were able to build adequate retirement savings through the superannuation system to manage the financial risks of ageing and retirement.
“We believe that enshrining the objectives for superannuation is an important step in delivering stability and certainty, and stress that this important task should be undertaken in an orderly and unhurried fashion,” she said.
The association first called for superannuation policy to be detached from the short-term budget cycle and linked to a review and assessment process, such as the IGR, at the professional body’s 2016 National Conference in Adelaide in February.
“I think the more important thing in setting the objective is actually trying to remove superannuation policy decision-making from the budget cycle,” association head of policy Jordan George said at the time.
“That’s why we have recommended that a more appropriate way to make superannuation policy decisions is to maybe link it to something like the Intergenerational Report, which is published every five years.
“So every five years you can have a stocktake: stop, have a look at how the system has been performing for the last five years, do we need to tweak it, does it need adjusting. If yes, let’s do that now. And so super is not used to fill revenues or fill holes in the budget.”
According to George, by limiting super changes to five-year periods, Australians would have a lot more certainty with their retirement planning.