Kelly O'Dwyer sticks to 'simple' purpose for superannuation (.........CIPR)
Kelly O'Dwyer said the government would stick to a concise objective of super.
The federal government has ignored industry pleas to expand the objective of superannuation that will be enshrined in legislation.
Financial Services Minister Kelly O'Dwyer said on Friday she would keep the objective of super concise in a move that disappointed super industry executives who have been imploring the government to make the goal more aspirational.
Introducing a goal of providing Australians with an a comfortable retirement would increase the burden on the government of the day to measure super policies against a concrete objective and would probably require an adjustment of tax breaks so that low income earners received greater tax concessions.
The Coalition will enshrine in law that the goal of super is "to provide income in retirement to substitute or supplement the age pension", as recommended by the Financial System Inquiry led by former Commonwealth Bank of Australia chief David Murray.
Ms O'Dwyer argued that expanding the objective to include helping Australians to save for a comfortable, adequate or dignified retirement was overly subjective.
"As David Murray, who headed the FSI, recently said, to include these very subjective words would 'open the way to constant political interference'."
Moreover, the government is acutely aware that there is no consensus on how concepts such as 'adequacy', 'comfort' or 'dignified' are understood, let alone measured," Ms O'Dwyer told delegates at the annual Association of Superannuation Funds of Australia conference.
"That is why the Government has ultimately decided that a simple, unambiguous objective, without subjective concepts, is the best path forward whilst noting how important some of these other concepts are in the Bill's explanatory materials," Ms O'Dwyer said.
The day before the Martin Fahy, the chief executive of ASFA, said Australia needed to "aspire to a retirement income system that provides as many people as possible with a comfortable retirement."
Industry Super Australia chief David Whiteley argued that striving for an "adequate" retirement was an objective goal, given that ASFA had a widely used retirement standard in place.
According to the standard, a retiree needs an income of $59,000 a year, while a single person needs $43,000 a year.
Peter Collins, chairman of Industry Super Australia and a director of the Hostplus industry super fund, said the objective was "too modest".He said: "It's a starting point and they are humble beginnings. We can do better. We can do more and we should."
Tom Garcia, chief executive of the Australian Institute of Superannuation Trustees said the Coalition's objective did not go far enough. "The objective of super should incorporate an aspirational element that gives direction to the government, industry and the Australian people to deliver better outcomes," Mr Garcia said.
Andrea Slattery of the SMSF Association said her organisation would continue to work with government to work out how adequacy principals could be included in a set of secondary objectives.
Ms O'Dwyer told delegates that the government would consult with industry on how new retirement products would be treated under the age pension rules "in the coming months" and would release a discussion paper later in the year to develop a framework for comprehensive income retirement products (CIPRs).
"CIPRs is a complex policy area. It's something we need to get right, and getting it right can only be done through consultation with a broad range of stakeholders, including you," Ms O'Dwyer said, adding the consultation period would most likely be a lengthy one to ensure all voices were heard.
(20min delay)