While the introduction of an objective of superannuation has been widely supported by the industry, a major super fund has put forward a number of recommendations to ensure that the objective “delivers on its promise for all Australians”.
In its submission to recent consultation on legislating the objective of super, $76 billion industry super fund HESTA indicated that it “strongly supports” enshrining the objective in legislation and the Albanese government’s proposed wording for the objective.
But the fund suggested that explanatory materials accompanying the legislation should clarify the super system’s role in delivering an “equitable and dignified retirement income”.
Three recommendations have been put forward by HESTA. The fund called for the explanation of “equitable” to include that system settings should not entrench or create inequitable outcomes. It also urged for the materials to include an ambition to close the gender super gap.
“We believe in the power of superannuation to transform lives and advocate for a system that truly works for all,” HESTA chief executive officer Debby Blakey said in a statement on Tuesday.
"We cannot move forward while leaving some behind. Our superannuation system must actively work to redress imbalances. Our aim is simple: A future where the gender superannuation gap is a thing of the past.”
Meanwhile, HESTA’s third recommendation is to ensure that sufficiently robust accountability mechanisms are in place to assess super policy against the new objective.
"Transparency and thorough analysis are essential because Australians deserve to know how policies affect their retirement savings,” Ms Blakey added.
“We must not only aim for equity but also measure our progress.”
The country’s largest super fund, AustralianSuper, also expressed strong support for the objective in its submission.
The government has proposed that the objective be “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
“We favour an objective that is simple and focused on what superannuation funds are designed to do – to help members achieve their best financial position in retirement,” said Paula Benson, chief officer, strategy and corporate affairs at AustralianSuper.
“Legislating the objective of superannuation is an important reference point for the operation and evolution of Australia’s world-leading retirement income system. It is also long overdue.”
AustralianSuper did not put forward any recommended changes to the objective or the explanatory materials in its submission.
However, the fund highlighted two reforms that it said are consistent with the objective’s “equitable” focus and could immediately help improve equity in the system: paying super on paid parental leave and increasing the low-income superannuation tax offset (LISTO).
“These proposals would promote gender equity in the superannuation system and better support the superannuation savings of low-income earners,” the fund said.
“They would give both women and low-income earners a more equitable share of superannuation tax concessions and improve their retirement outcomes.”
Ms Benson added that AustralianSuper, which has over 3.2 million members and more than $300 billion in assets, would welcome the passage of the objective “as soon as possible”.
When contacted by InvestorDaily regarding its stance on the objective, Australian Retirement Trust (ART) pointed to a statement made in February in which the fund expressed its support.
“Ultimately, all of the features of our superannuation system, whether that’s balance caps or tax settings, should be about making our superannuation system both sustainable and equitable,” ART CEO Bernard Reilly said at the time.
“An objective of superannuation that is enshrined in legislation will make all these other discussions and debates easier for the industry.”
Meanwhile, an Aware Super spokesperson told InvestorDaily that the fund views an objective for super as “a safeguard for the future viability of the world-class system Australians depend on for their retirement”.
“We’re particularly pleased the government has called out equity as a key part of a proposed objective,” the spokesperson said.
“While Australia’s super system is leading in many respects, it does underserve large swathes of our community who need help the most – women, people on low incomes and other disadvantaged groups.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.