The superannuation industry appears to have united in telling the Government that it has set the bar too low in seeking to establish an objective for superannuation.
The unanimity of the industry has been revealed in submissions to the Senate Economics Committee reviewing the Government’s legislation, with virtually all segments of the sector arguing that the objective should be to do more than to provide income in retirement to substitute or supplement the Age Pension.
The submissions reveal that virtually every major superannuation and financial services organisation is on the same page in suggesting the Government’s legislation sets the bar too low with most suggesting that the objective should entail seeking to deliver a comfortable retirement.
However the Grattan Institute has used its submission to urge the Senate Committee to ignore the pleadings of the superannuation organisations, arguing that Committee should “reject the view that superannuation’s objective is to provide an adequate, or ‘comfortable’ retirement income for all Australians”.
The Grattan Institute said this view could lead policymakers to force people to save under the Super Guarantee so that their incomes while working were less than their incomes in retirement.
This runs counter to the arguments of the Association of Superannuation Funds of Australia (ASFA), the Financial Planning Association (FPA), the Financial Services Council (FSC), the Australian Institute of Superannuation Trustees (AIST), Industry Super Australia (ISA), and the SMSF Association.
ASFA was one of the first organisations to argue for a more aspirational objective and this theme has been endorsed by the other organisations, with AIST referring to the lack of reference to retirement incomes adequacy and suggesting that it was “the widespread view of the superannuation industry including AIST is that absence of a reference to providing adequate income that delivers a comfortable retirement is a serious omission to the objective in the bill”.
For its part, the Financial Services Council said it was concerned that the objective of superannuation proposed in the bill “does not reflect the fact that superannuation consumers aim to save for an adequate retirement based on their personal circumstances”.
The FPA submission said it believed “that the superannuation system ought to aspire to more than merely substituting or supplementing the Age Pension”.
