The SMSF Association says it is essential that the concept of adequacy be included in the Superannuation Objective to help ensure people have a secure and dignified retirement.
In its submission to the Senate Economics Legislation Committee, Association Managing Director/CEO Andrea Slattery said: “Adequacy must be included in the objectives of the superannuation system so that our retirement system maintains its goal to provide people with adequate retirement savings to deliver a ‘financially secure and dignified retirement’.
“This upholds an aspirational element to superannuation and encourages people to save during their working life to fund a self-sufficient retirement.”
The Association’s submission acknowledged that including the concept of adequacy in the objectives of superannuation did raise certain issues, particularly that there is no current accepted definition of ‘adequate retirement savings’.
But the Association argued that these issues could be circumvented by including a subsidiary objective of “providing a secure and dignified retirement” rather than referencing adequacy or a defined level of income to be aimed for in retirement.
The SMSF Association believes that the subsidiary objectives (which must be linked to the Primary Objectives) that should be regulated are: Providing a secure and dignified retirement; managing risks in retirement; be invested in the best interests of members; alleviate fiscal pressures on Government from the retirement income system; be sustainable and equitable; maintain a pool of national savings; and be simple, efficient and provide safeguards.
Slattery says it’s most important for policymakers to evaluate future superannuation changes against all of the superannuation’s objectives, including subsidiary objectives, so that all facets of the superannuation system are appropriately accounted for.
“This will help deliver greater certainty for superannuation fund members and provide increased transparency on future government policy and its effect on superannuation.”
She says the Association has long been a proponent of enshrining the superannuation system’s objectives in law and believes it is a critical step to ensuring much-needed stability for those saving for retirement.
“With a retirement system that is still to mature, the importance of setting these objectives down in in law correctly is essential. This is why we are so adamant that the concept of the superannuation system aiming to deliver a ‘secure and dignified’ retirement must be included in the Government’s final objectives for superannuation.”