The ‘Purpose’ of Superannuation in Legislation
The recently unveiled draft legislation introduces a proposed objective for superannuation: “to safeguard savings with the aim of providing a dignified retirement income, complemented by government support, in a just and sustainable manner.”
The importance of codifying the purpose of super lies in ensuring that any future legislative alterations to the superannuation framework align with this defined objective. This definition encompasses a broad spectrum of considerations.
For instance, “just” seeks to address the distributive effects of superannuation policies, granting the government the flexibility to target tax incentives to address disparities stemming from demographic factors and structural inequalities. These encompass intergenerational disparities and outcomes for various demographic groups, including women, First Nations Australians, vulnerable individuals, and low-income earners.
“Sustainable” encompasses adapting to the evolving needs of an aging population, including the objective of reducing reliance on the Age Pension. The draft legislation also hints at evaluating the feasibility of the cost associated with tax concessions designed to motivate Australians to save for their retirement.
The inclusion of “deliver income” appears to reinforce the notion that superannuation savings should be utilized during retirement to provide individuals with a source of income.
With over 15 million Australians now possessing superannuation accounts, the Australian superannuation pool has burgeoned from approximately $148 billion in 1992 to $3.5 trillion in 2023, and this growth trajectory is expected to persist. The total superannuation assets, relative to the GDP, are projected to nearly double from 116% in 2022-23 to approximately 218% of GDP by 2062-63.
Furthermore, the consultation recognizes the value of the superannuation system as a reservoir of capital that can support investments in critical areas of the economy, provided that these investments align with the best financial interests of members and national economic priorities.