Industry Super Australia
Last month, the federal Government announced its intention to legislate a formal objective for our superannuation system. After more than 30 years, the laws which underpin our super system still don’t articulate why superannuation exists, and what it’s meant to achieve.
The government’s proposed wording – currently out for consultation – states that super’s objective is to:
“Preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
The principles of equity, sustainability, and dignity included in the proposed objective (together with robust measures to hold policy makers to account) will ensure the system continues to work towards delivering the best possible retirement for all workers. Yet it’s the idea of preservation is the most critical. The magic happens by having compulsory contributions preserved until a person retires so that they can grow through good investments and compound interest. Of course members should continue to have early access if they’re in genuine hardship and have nowhere else to turn.
Without preservation rules, the money would not be there for workers at retirement. Current inequities would grow even worse and the whole idea of super would become unsustainable. This is the case for the 1 million Australians who accessed their super before Job Keeper payments were made available during the 2020 pandemic lockdowns. Those workers can now expect $80,000 less in their nest egg.
The proposed wording should also stop other policies that would have an even worse impact, like allowing people to tap into their super for a deposit on a house. Put simply, placing super in the pocket of a person at an auction is like pouring petrol on a bonfire. It would jack up house prices and mean bigger mortgages and higher repayments – exactly the last thing young people need given the prospect of further hikes in interest rates. And of course, it leaves them with up to $80K less in their nest egg when they retire.
On behalf of nearly 5 million Industry SuperFund members, ISA will be making the case for the parliament to support the objective as it has been proposed. The wording reflects the community’s expectation that super is there as savings to be used to fund a good life in their retirement. It’s now over to politicians, industry bodies, super funds, and everyone else who works in the system to meet that community goal.
Protecting Australia’s retirement savings now and in the future