Cut super from the budget cycle: FSC

The Financial Services Council (FSC) on Thursday called on the government to take superannuation out of the short-term budget cycle.

In submitting its proposed definition of the objective of superannuation to the federal government, FSC chief executive Sally Loane also recommended the government enshrine the purpose of super into law through a stand-alone bill.

Ms Loane said the objective of super should be “to deliver dignity and independence for all Australians in retirement by providing replacement income that is adequate to provide a comfortable standard of living”.

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She was responding to a recent call for industry submissions around the objectives of super by the Assistant Treasurer Kelly O’Dwyer.

“It is imperative that superannuation is taken out of the short term budget cycle. Defining the objective of superannuation and making it law should orientate the debate towards the long-term goal of ensuring we have a system which will provide adequate and comfortable retirements for all Australians,” she said.

Ms Loane called on the government to enshrine a short and concise objective in legislation, but to this independently of existing superannuation law.

Financial Services Council CEO Sally Loane said that super's objective was to increase standards of living for retirees.

Sally Loane said that super’s objective was to increase standards of living for retirees. Photo: AAP

“Defining super and enshrining it in law was an important recommendation of the Financial System Inquiry and will serve as a yardstick against which all future decisions impacting on our retirement system can be measured,” Ms Loane said.

Ms Loane said it was imperative the system allowed super to deliver on its goal to enable more Australians to self-fund their retirement and to decrease pressure on the public purse.

“The age pension system, which costs $44.7 billion each year and rising by 7 per cent annually, will never be able to deliver comfortable retirements for Australians in an aging society,” she said.

Ms Loane said taxpayer support for super must be consistent with the objective of more Australians being able to independently fund their retirements.

“We should focus on middle Australia, the vast bulk of our population, and those with the greatest capacity to reduce their reliance on the age pension,” she said.

“By cushioning future generations against the cost of an aging population, it is more likely the living standards we enjoy today will also be enjoyed by our children.

“This is why we must take a long term view of any superannuation policy announced in coming months.”

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