Changes to the superannuation and retirement saving system should only be made if they result in improvements to the efficiency and effectiveness of the system and do not have a negative impact on savings made under preceding rules, according to the Self-managed Independent Superannuation Funds Association (SISFA)
The Association made the recommendation as part of its Retirement Income Review submission, which said changes and the threat of changes by a series of governments “has contributed to a less than optimal result for the superannuation system”.
“Superannuation is a lifetime investment and unexpected changes to the rules, especially around taxation and usually announced in the budget without warning, are not conducive to confidence in the system and encouraging people to maximise their retirement savings,” SISFA said.
The association added that people making life-changing decisions about when to retire and when to withdraw super savings have been hit by changes to the retirement and superannuation system and “tax changes with retrospective effect are unfair whatever the rationale for them”.
SISFA also called for longer lead times around any changes, including greater interaction with stakeholders, to prevent any negative impacts on their superannuation or retirement savings.
“When changes are made, people should be given time to adjust the disposition of their retirement savings to their benefit and to avoid detriment before the changes take effect,” the submission stated.
“Proposed changes to superannuation should be flagged well in advance so retirement savers, associations and other interested parties have an opportunity to comment before policy decisions are made and legislation introduced. Such consultation should be standard good government practice.”
SISFA added that setting a meaningful definition of the purpose and goals of superannuation would play a large part in ensuring changes met the criteria outlined above and rejected any approach that regarded superannuation as an adjunct to the age pension.
“The ‘substitute and supplement the age pension’ objective proposed by the Financial System Inquiry (Murray report) is manifestly inadequate and uninspiring,” it said.
“It positions superannuation as just an adjunct to the age pension when the goal should be to make superannuation the main vehicle by which most Australians save for their retirement, with the age pension serving its purpose as a social safety net for those who will not be able to manage financially on their own in retirement.
“We note the 2016 Superannuation (Objective) Bill lapsed more than three years after it was introduced to justify the changes to superannuation made in the 2016 budget. The bill should be withdrawn and replaced by legislation that comprehensively sets out the objective of superannuation and positions it as the prime vehicle for retirement savings.”
SISFA also called for the RIR to present facts to the government that would lead to good long term outcomes instead of short term fixes to current problems in the superannuation and retirement saving system.