COTA Australia welcomes the opportunity to comment on the Inquiry into Superannuation (Objective) Bill 2016 currently under consideration by the Committee. Superannuation law and regulations are of great interest and importance to COTA Australia’s constituency of current and future older Australians.
COTA strongly welcomed the recommendation of the Financial Systems Inquiry (FSI) in 2014 that the objective of superannuation be confirmed in legislation. In that light, the Bill before your Committee represents an overdue but crucial improvement to the legislative framework underpinning the superannuation system.
COTA also welcomed and participated in the consultation processes on this issue undertaken first by the then Assistant Treasurer, Josh Frydenberg, in 2014 and later by the current Assistant Treasurer, Kelly O’Dwyer, in early 2016.
Our April 2016 submission noted “that ‘adequacy’ needs to be defined in terms of a minimum level of income below which retirement income is inadequate, and clearly the Age Pension should be designed for that purpose”. In hindsight this proposed objective was deficient in referring only to compulsory superannuation, rather than to a system with both compulsory and voluntary components.
COTA has followed the stakeholder debate on this issue closely in the intervening period between expressing these views to the Treasury and the current Bill coming before the Parliament. We have noted the competing stakeholder views and interests expressed regarding the wording of the objective.
COTA’s own view has developed since April 2016 following discussion with a wide range of stakeholders and consideration of the debate.
COTA is now prepared to support the objective proposed by the Financial System Inquiry (FSI) and adopted by the Government, namely that the primary objective of superannuation should be to substitute or supplement the aged pension.