The government has released a discussion paper outlining the formal objective of Australia's superannuation system that it proposes to enshrine in legislation.
The words the government is proposing are the same as those recommended by the Financial System Inquiry: 'To provide income in retirement to substitute or supplement the Age Pension'.
In the paper, they explain that a legislated objective will serve as a guide to policy-makers, regulators, industry and the community about superannuation's fundamental purpose.
"The objective will provide a way in which competing superannuation proposals can be measured and a framework for evaluating the fairness, adequacy and sustainability of the superannuation system," they said.
But while no formal objective of superannuation currently exists, the proposed objective simply formalises the objective that has always been inferred from reasons the Keating government in 1992 outlined when it introduced the Superannuation Guarantee legislation: to supplement the age pension to enable Australians to enjoy improved standard of living in retirement.
A statement released today by the Association of Superannuation Funds of Australia (ASFA), said: "The purpose of the system as outlined by the government in today's discussion paper-to provide income in retirement to substitute or supplement the Age Pension-is a worthy objective, and the good news is that the system is already well on its way to meeting this purpose as well as many of the supporting principles."
Illustrating how the debate surrounding the apparent need for a formal legislatively defined objective became conflated with concerns over how the superannuation industry operates, ASFA added: "[we] believe that the superannuation system has an extended purpose."
Pauline Vamos, ASFA chief executive, said, "Once the purpose and principles of the system are enshrined, we can have a conversation about the tax concessions that support the system."
"We must account for the fact that, the superannuation system is still maturing, that broken work patterns still put many members of the community at a disadvantage in retirement and that the system comprises both self-managed and pooled vehicles, which means that a one size fits all approach does not always work," she added.