The superannuation industry has welcomed the government's response to the Financial System Inquiry, with the decision to enshrine the objectives of the system within legislation singled out for particular praise.
The Turnbull government released its response to the December 2014 final report of David Murray's Financial System Inquiry yesterday.
On the topic of superannuation, the government pledged to develop and introduce legislation to enshrine the objective of the superannuation system by the end of 2016.
Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos highlighted the importance of the proposal – but said it is "equally important" to consider measures of success for the super system.
"The superannuation system is one of the most highly regarded private pension systems in the world, but there is always room for improvement to ensure that it is sustainable and provides the best retirement outcomes for all Australians," Ms Vamos said.
ASFA has previously advocated a series of 'benchmarks' for superannuation to meet by 2050, including: less than 20 per cent of Australians relying on the age pension; the age pension only comprising 6 per cent of GDP; Australians retiring with an income replacement rate of 65 per cent; and at least 50 per cent of Australians enjoying a 'comfortable' retirement.
The Australian Institute of Superannuation Trustees (AIST) congratulated the government on its decision to enshrine the objectives of superannuation in law.
AIST chief executive Tom Garcia said the decision would help protect the superannuation system from "endless tinkering".
"Legislating objectives for superannuation will hopefully put an end to ad hoc policy tinkering and provide a robust framework with which to assess any future policy proposals," Mr Garcia said.
"After 25 years of compulsory super this is a long-overdue measure that will be particularly valuable in assisting the current tax inquiry in its consideration of any proposed tax changes for super."
Vanguard head of market strategy Robin Bowerman welcomed the intention to enshrine the objectives of super, along with an acceptance of the need for the development of comprehensive income products.
"One of the key objectives of the super system is to deliver income for people in retirement yet this remains an area of the system where much more work needs to be done to help investors achieve the best possible outcomes in terms of product choices and ability to manage risk in the retirement years," Mr Bowerman said.
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