In its submission to Treasury on the objective of superannuation, ASFA laid out four design principles that it said should guide policy and system settings.
Super, according to ASFA, should be a universal system that belongs to all Australians; it should not be used to fund unrelated public policy objectives; voluntary contributions and savings within the system should be incentivised; and it should be simple and efficient, and provide safeguards.
On the second point, ASFA took as a case study a report in yesterday’s Australian Financial Review that Liberal Senator Chris Black has asked the Parliamentary Budget Office to model a number of options that would allow graduates to repay university debt with superannuation savings.
“When considered against the objective it is clear that the policy is not appropriate as it would reduce the adequacy of retirement incomes,” said ASFA.
“It also runs contrary to ASFA’s policy design principle that superannuation savings are not to fund unrelated public policy objectives.
“The use of savings for alternative purposes diminishes confidence in the system and disillusions members,” said ASFA.
Furthermore, the removal of funds from a super account early in life would have a “significant effect” on the balance at retirement, said ASFA.
“Such a policy would also not be in the overall financial interests of the individual, as superannuation returns an average 9.3 per cent per annum (over 30 years), whereas HELP debts increase at CPI, 3.8 per cent (over 30 years).”
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