For many years, the superannuation system has been besieged by constant changes to the legislative framework (many introduced at or around budget time each year) resulting in legislative “confetti”, with different changes serving inconsistent policy aims. These constant changes have had a destabilising effect on those operating within the system and only serve to undermine public confidence in the system. Accordingly, we consider that steps need to be taken to bring policy stability. We see the introduction of objectives for superannuation as an important factor in this regard.
The objectives for superannuation cannot be determined in isolation. Both compulsory and voluntary superannuation are part of a broader retirement incomes framework. As such, we believe that the objectives should be determined after considering the wider framework, involving the age pension, superannuation and non-superannuation savings.
The Financial System Inquiry (FSI), in its final report, suggested an approach of an overarching primary objective, and a series of subsidiary objectives. While this cascaded approach comes at the cost of simplicity, high level objectives could be too general to address the different policy issues surrounding superannuation.
In our view, the objectives for superannuation should be enshrined within legislation, adopting the primary objective / subsidiary objectives model to ensure that they actually have a positive effect. We recommend that the primary objective be framed in terms of both the desired level of support provided by superannuation and by reference to a decreasing proportion of the population relying on the age pension.