Super consultation looks to shake up industry

Treasurer Jim Chalmers said that Australia’s superannuation system must be “equitable and sustainable” in a speech on Monday (20 February) and brought about speculation that there may be a move to crackdown on top-end tax concessions in the upcoming budget.

“[We want] to end the super wars once and for all and make sure that future changes to the system are compatible with its very objective,” he said.

Mr Chalmers said the former government’s policy of allowing people to access their superannuation early — especially during the pandemic — had created “devastating impacts on Australians’ savings”.

Recent analysis by the Australia Institute found that tax breaks for superannuation could cost the federal budget $52.5 billion this financial year, almost as much as the age pension.

This is one of the main reasons the government is seeking to enshrine in law a new definition that states “the objective of super is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

“Despite its central role in the retirement income system, there is no agreed objective of superannuation, legislated or elsewhere, to serve as a guide for policy makers, government, regulators, industry, and the wider community,” he said.

“Legislating an objective for super will give confidence to the super industry and peace of mind to Australian workers that we’ll do everything we can to safeguard their savings to deliver income in retirement.”

He added given the increasing number of Australians entering retirement age, there needs to be a greater focus on how Australia’s superannuation system is delivering strong retirement outcomes.

“Superannuation is an increasingly important source of capital in our economy and the significant scale of Australia’s superannuation system contributes to the strength of our financial markets through capital deepening,” he said.

“There is a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the long‑term investment horizon of superannuation funds.

“For these broad benefits of superannuation to be maximised, it’s critical for there to be a clear, shared understanding of the objective of superannuation.

“Legislating an objective for super is about instilling greater confidence in the system for generations to come.”