Douglas Latto
Workplace Super Specialists Australia (WSSA) is calling on Treasury to make the primary objective of superannuation more meaningful to working Australians.
The WSSA made the call in a submission responding to an Australian Government invitation to provide feedback on its Objective of Superannuation Discussion Paper issued last month.
An association that represents workplace superannuation specialist advisory businesses, the WSSA argues that the primary objective of superannuation is to ‘support working Australians in providing an income sufficient to maintain a standard of living in retirement similar to what they had during their working lives’.
In comparison, the WSSA considers the Financial System Inquiry’s definition of the primary objective of superannuation to ‘provide income in retirement to substitute or supplement the Age Pension’ as ‘impersonal’.
“There needs to be a method of engaging working Australians to be active rather than passive participants in securing their financial security in retirement,” says Douglas Latto, Chief Executive Officer, WSSA.
He says the WSSA believes this more personal primary objective, supported by three high level objectives of adequate levels of retirement income, relieving pressure on the Aged Pension and increasing national savings, is the basis of a stronger super model and one that creates a ‘clearer’ path for Regulators going forward.
“For superannuation to matter to Australians it has to be put in a framework of objectives and principles, which people can relate to and strive for.”
Latto says: “The above objectives need to be supported by principles and we concur with the four outlined in the Charter Group’s 2013 submission to Treasury titled ‘Objectives and Principles of the Australian Superannuation System’.
The four principles in that submission included:
- Adequacy – The degree to which the retirement income system enables people to achieve a sufficient standard of living in retirement relative either to the standard they enjoyed while working or as compared to an objective budget standard for retirees.
- Sustainability – Government expenditure, both actual and notional (through tax concessions) on the retirement income system (that is, the Age Pension and superannuation) must be affordable over the long term. Successive intergenerational reports have concluded that population ageing will place substantial pressure on Australia’s economy.
- Certainty – People should have sufficient confidence in the regulatory settings and their evolution to trust their savings to superannuation, including making voluntary contributions
- Fairness – A fair superannuation system is one that treats people in the same circumstances equally and is perceived to be fair by the community. Given that building up superannuation is connected with employment, regard has to be had to those, who for a variety of reasons, have not fully participated in the workforce and therefore have less superannuation than others in their age cohort
Latto concludes: “Retirement is about people. Superannuation is a vehicle which working Australians can utilize to improve retirement outcomes and reduce reliance on Age Pension support. If we keep this in mind, then we shall be on the right track.”