Merits behind the Superannuation (Objective) Bill may soon be debated in the Senate, following a Senate Economics Legislation Committee report filed on Tuesday.
Committee chair, Senator Jane Hume, told Financial Standard that after considering all positions it was recommended that the legislated primary objective for the superannuation system should be "to provide income in retirement to substitute or supplement the Age Pension."
"Stakeholders were almost unanimously supportive of a legislated objective of superannuation, although inevitably there was a diverse range of views about exactly what that objective should be and how it should be worded," Hume said.
"The committee also recommended that, concurrent to that objective, future reforms to superannuation are linked to the findings of the five-yearly Intergenerational Report.
"This should provide greater certainty to all superannuants and to industry, now and in the future."
The bill, which forms part of the government's superannuation reform package, aims to legislate the primary and subsidiary objectives of the superannuation system.
Together with the age pension and private savings, "savings from compulsory and voluntary contributions to superannuation are important elements of the three-pillars that underpin Australia's retirement income system," the explanatory memorandum stated.
"Given its importance, it is essential that future superannuation policy is guided by clear objectives."
As per the bill, all future changes to superannuation policy will be assessed for compatibility with the primary objective and subsidiary objectives.
At a public hearing earlier this month, various stakeholders expressed their views on the objective. While majority endorsed the adoption of a single primary objective, some expressed concern about the working of the primary objective.
Global consulting and financial services firm Mercer believed the proposed definition was "too vague," and that more clarity was required around when the income from superannuation should move from supplementing the Age Pension to becoming a substitute.
Industry Super Australia questioned whether the bill would be able to meet the goal of assisting policy makers, noting the considerable debate around whether the rate of compulsory superannuation should be increased to 12%, and made specific reference to the lack of consultation which occurred through the Murray Financial System inquiry.
The majority of submitters welcomed the introduction of an independent monitoring and review system to assess the performance of the superannuation system.
Labor Senator and Shadow Minister for Small Business and Financial Services, Katy Gallagher, tabled a dissenting report on the Senate inquiry, requesting that the government withdraw the bill, and undertake "genuine and detailed consultation with stakeholders."
While Labor supports the formalisation of an objective for superannuation, Gallagher called on the government to "go back to the drawing board and properly consult with the sector."
The committee recommended that the Senate should pass the bill, and that compliance of future superannuation reforms be periodically assess as part of the Intergenerational Report.