Super settings should be reviewed every five years

Superannuation policy changes should be undertaken through a review of settings linked to the Intergenerational Report every five years and should be removed from the annual Budget cycle, according to the SMSF Association.

The association’s submission to the Productivity Commission (PC) inquiry on super efficiency said it was imperative for the Government to get industry consensus on the objective of super and that the system needed a sustained period of stability free from significant changes.

SMSF Association chief executive, John Maroney, said: “The objective for the superannuation system should be based around the provision of retirement income, as recommended by the Financial System Inquiry, and supported by a set of guiding principles that can be used to give context to the primary objective”.

He said the objective needed a focus on providing retirement income and also to ensure retirees were able to build adequate retirement savings through the super system to manage the financial risks of ageing and retirement.

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“Superannuation policy changes can then potentially be undertaken through a review of superannuation settings linked to the Intergenerational Report which is required under the Charter of Budget Honesty Act 1998 to be completed every five years and released by the Treasurer at the time,” Maroney said.

“Having the Intergenerational Report released once every five years will allow the Government, industry and consumers to take a ‘health check’ on the superannuation system to see whether it is attaining its goals and whether any adjustments/changes to policy settings are required.”

Maroney noted that when super changes occurred during a Budget policy, it could lead to individuals becoming disengaged with the system and might withhold from making contributions and managing their super savings in the most appropriate way for them to maximise their retirement benefits.