The Financial Services Council (FSC) has released its proposed definition of the objective of superannuation ahead of May's federal budget.
In a submission to Treasury, the FSC said it defines the objective of super as “to deliver dignity and independence for all Australians in retirement by providing replacement income that is adequate to provide a comfortable standard of living”.
The FSC recommended that the objective of super be enshrined within a standalone bill, rather than through an existing superannuation law.
Last month, Treasury released a discussion paper on the objective of super, giving the financial services industry until 6 April to make a submission.
FSC chief executive Sally Loane said bringing this definition into law will be a step toward creating an “adequate” superannuation system in Australia.
“Defining super and enshrining it in law was an important recommendation of the Financial System Inquiry and will serve as a yardstick against which all future decisions impacting on our retirement system can be measured,” Ms Loane said.
“It is imperative that superannuation is taken out of the short-term budget cycle. Defining the objective of superannuation and making it law should orientate the debate towards the long-term goal of ensuring we have a system which will provide adequate and comfortable retirements for all Australians.”
Mr Loane added that the age pension system costs $44.7 billion each year and is rising by 7 per cent annually. This “will never be able to deliver comfortable retirements for Australians in an aging society”, she said.
In addition, Ms Loane said taxpayer support for super must be consistent with the objective of more Australians being able to independently fund their retirements.
“We should focus on middle Australia, the vast bulk of our population, and those with the greatest capacity to reduce their reliance on the age pension,” she said.
“By cushioning future generations against the cost of an aging population, it is more likely the living standards we enjoy today will also be enjoyed by our children.
“This is why we must take a long-term view of any superannuation policy announced in coming months.”