Having a clear, broadly agreed goal for Australia’s superannuation system matters. COTA supports having a goal, and making sure that goal is retirement income for older Australians.
Having a clear, legislated definition, hopefully with bipartisan support, will ensure that all parts of the superannuation system is working towards a common goal. Too often we see people withdraw less income than they had earnt from the investment. These older people are living lives of scrimping and saving, and leaving more money to the next generation in the form of inheritance than they had at the point of retirement. Whilst loving your kids is a great thing, we don’t think that’s what superannuation is for. Nor is it the reason the Government provides approximately $50B of tax concessions that help increase the amount of money Australians have for their retirement.
The introduction of a legislated objective, focusing on income in retirement, will help focus the superannuation industry’s attention on these issues and other matters. In February 2023 the Government embarked on a six week consultation on the benefits, phrasing and implementation of an objective for superannuation. The consultation paper sought advice on the objective of superannuation as being “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
One of the areas COTA discussed in its submission is the need for accountability and transparency around how future changes to superannuation laws and regulation are consistent with the legislated objective of superannuation. We propose that future Governments should be required to publish a statement with all superannuation amendments outlining how their amendments are consistent with the legislated objective of superannuation.
We also backed calls for Government to commit to a five year report commenting on the superannuation system holistically (as recommended by the Productivity Commission in 2018).
These two accountability measures we think will improve transparency about how the superannuation objective is working.
COTA Australia has been a long term supporter of the need to legislate superannuation’s purpose as being for retirement incomes. We are appreciative that the Albanese Government is taking up the cause and look forward to seeing legislation introduced sometime in this term of Government.