Govt opens second objective of superannuation consultation

The government has opened a second consultation on the proposed objective of superannuation.

It follows an initial consultation in March which sought feedback on the framing of the draft objective of superannuation, including its benefits and practical application. This received over 150 submissions.

The government is now consulting on the Superannuation (Objective) Bill 2023 and Superannuation (Objective) (Consequential and Transitional Provisions) Bill 2023.

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.”

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As outlined by Treasury, this "does not alter superannuation trustee’s existing obligations or how members money can be invested or accessed, however it does serve as a reminder to them of their role in the super system, including to support members holistically during their working life, and their transition to retirement."

It seeks to ensure future changes to the super system are compatible with its objective by requiring policy‑makers to assess proposed changes to super legislation for compatibility with the objective.

The government is seeking stakeholder feedback on the draft material including legislation, consequential and transitional provisions and explanatory materials.

In February, Treasurer Jim Chalmers highlighted the need for greater focus on how the super system is delivering strong retirement outcomes given the increasing number of Australians entering retirement age. 

“Superannuation is an increasingly important source of capital in our economy and the significant scale of Australia’s superannuation system contributes to the strength of our financial markets through capital deepening,” he said.

“There is a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the long‑term investment horizon of superannuation funds.

“For these broad benefits of superannuation to be maximised, it’s critical for there to be a clear, shared understanding of the objective of superannuation.”

Responding to the consultation, HESTA chief executive, Debby Blakey, said: "Legislating the objective of super will provide a shared understanding for members, funds, regulators and the government as to the purpose of the system and a clear measure against which to consider any future policy settings.

"The wording of the objective released by the Albanese government includes the system's central pillars - preservation and delivery of income - while highlighting the fundamental importance of dignity and equity in retirement."

Bernie Dean, chief executive of Industry Super Australia, said: "This proposal is in lockstep with the expectations of the community. Super is there to help provide working Australians with certainty and stability in retirement – an aspiration that should be enshrined and elevated above the day-to-day political fray.

"The principle of preservation is the cornerstone of our world-renowned super system. Without preservation,
workers miss out on the benefits of compounding interest – which has seen the growth of super savings
consistently outpace other asset classes.”

The closing date for submissions is 29 September 2023.