The objective of superannuation should not be open-ended, the Institute of Public Accountants (IPA) has stated in light of the potential changes expected to hit the system in next month’s federal budget.
IPA chief executive Andrew Conway said while the compulsory super system was still relatively young, it was already playing a significant role in the nation’s prosperity, and an updated legislated objective would serve as a guide to future reforms, assisting policymakers, regulators, industry and the community about the fundamental purpose of super.
“At the heart of the objective is the goal to achieve better and sustainable retirement outcomes, however, this should not be open-ended,” Conway said.
“There are a number of ways to help government prevent superannuation from becoming an estate planning tool, such as limiting tax concessions above a certain level or imposing higher levels of taxation on the transfer of death benefits to non-dependants as bequests.
“These options will help the system become more fiscally sustainable by limiting the tax-incentivised reasons for using superannuation as an estate planning vehicle.
“The objective of our retirement system is to improve retirement incomes, but there needs to be a limit to the amount of taxpayer support to ensure fiscal sustainability.”
The Financial System Inquiry recommended important changes to improve some of the anomalies in Australia’s retirement savings system, which encompassed superannuation, he said.
“One of the recommendations is to develop and introduce legislation to enshrine the objective of the superannuation system,” he said.
“It may be ironic that we have to go backwards to go forward, but the IPA believes this is an important step in the evolution of our superannuation system.
“We need to address anomalies and stop the constant tinkering, which generates distrust in the system.
“Australia’s superannuation system has been ranked as third best in the world by the Mercer Global Pension Index, which measures against features of adequacy, sustainability and integrity, so there is a lot to like about our present system.”
