In a dramatic final day of Parliament, the Albanese government successfully passed the objective of super despite a flurry of last-minute deal making, making Australia only the second country in the world – behind Switzerland – to formally enshrine the purpose of its pension system into legislation.
After tense negotiations between Labor, the Greens, and Senate independents, the government scaled back its original agenda but managed to secure the passage of over 30 bills by nightfall on Thursday.
Among the bills that passed was the Superannuation (Objective) Bill 2023, which the government has been trying to legislate for some time. However, one high-profile proposal – a tax on superannuation balances over $3 million – failed to pass, marking a setback for the government on this key policy issue but a win for the SMSF sector.
Industry groups have welcomed the formal enshrinement of the objective of superannuation, which defines super as “preserving savings to provide income for a dignified retirement, alongside government support, in an equitable and sustainable manner”.
In a statement, the Association of Superannuation Funds of Australia (ASFA) chief executive Mary Delahunty described the passage of the bill as a milestone for Australians’ retirement security.
“ASFA is very pleased to see the passing of this law that will codify what Australians have come to love about superannuation over the last 30 years – that it is their nest egg designed to assist them to achieve a dignified retirement,” Delahunty said.
Noting that the bill aims to solidify preservation as the cornerstone of the super industry, Delahunty said preservation is the “foundation of trust in superannuation”.
“It ensures that when Australians engage with the system, their contributions are protected for their retirement. It’s this principle that underpins the integrity of super and enables it to deliver the outcomes members and the nation rely on.”
Notably, the bill introduces a requirement for policymakers to produce a statement of compatibility for any proposed changes to superannuation, reinforcing long-term stability and ensuring reforms are measured against a guiding purpose.
“Australians need to know their superannuation is safe from the winds of political change,” Delahunty said. “This legislation sends a strong signal that the system will remain focused on delivering for members, now and into the future.”
Also commending the bill’s passage, the Super Members Council (SMC) said the objective will strengthen certainty and predictability for all Australians who rely on super to deliver retirement income.
In particular, SMC chief executive Misha Schubert said the wording of the objective reflects the views of everyday Australians.
“Ask everyday Australians what super is for, and they’ll tell you it’s their money for retirement,” Schubert said. “The ‘Objective of Super’ legislation reflects that clear and compelling purpose in ironclad law. It will be a guiding light for all future super policy development.
“An agreed objective of super in law supports more stable, effective and equitable policy settings and reinforces the strong system fundamentals needed to successfully evolve the system,” she added.
Similarly to ASFA, the SMC pointed to the significance of safeguarding super’s preservation policy – the key policy principle that the purpose of super is to deliver retirement income – in legislation.
“The goal of legislating an objective of super has long held bipartisan and cross-party support – and we congratulate the Senate on passing this important legislation,” Schubert said.
Industry responds
HESTA’s CEO, Debby Blakey, also issued a statement, reflecting on how much Australia’s retirement system has changed over the last three decades.
“Before compulsory super was introduced in 1992, many Australian workers retired with little to no savings. Today, a typical worker will retire with around $200,000, according to the SMC,” Blakey said.
“With our more than 1 million HESTA members in mind – around 80 per cent of whom are women – we have strongly supported this legislation and its recognition of the importance of preservation and equity as vital underpinnings to delivering a dignified retirement.”
This, the CEO said, will be a “north star to guide” future policymakers.
While HESTA praised the passage of the objective, the fund emphasised that there is still work to be done.
“We know there’s still much work to do to ensure that all Australians fully share in the benefits of our super system, particularly women, those earning lower wages and First Nations People.”
The country’s largest fund, AustralianSuper, added that the legislation will help keep future policy making focused on delivering the best retirement outcomes for super fund members.
CEO Paul Schroder said: “AustralianSuper endorses the new legislated objective, which is simple and focused on what superannuation funds are designed to do – help members achieve their best financial position in retirement.”
The “magic” of the super system, according to him, is compound interest and strong investment performance, with preservation playing a key role in both.
“We have seen over decades governments wanting to tinker with the system in ways that are not aligned with this purpose. Enshrining the Objective of Superannuation will keep a steadfast focus on what super is supposed to do – preserve members’ hard-earned savings over the length of a working life to improve their retirement outcome and help them to have a dignified retirement,” Schroder said.
“Any future law reform will have to consider the purpose and stability of the system, which is a significant step forward and highlights the fundamental nature of superannuation as a concessionally taxed, long-term savings vehicle for retirement.”
Insignia Financial also welcomed the news, with CEO Scott Hartley saying that its passage solidifies the focus on Australia’s super system as it moves from accumulation to the provision of retirement income.
However, Hartley made two key suggestions for policymakers.
“If we are serious about getting members engaged with their retirement savings sooner, we should rename our system from superannuation to retirement income.
“The government should also prioritise legislating affordable and accessible advice to help more Australians as they approach retirement and improve the advice process by creating efficiencies for comprehensive advisers to help more Australians,” Hartley said.
