Ending the political ‘super wars’

Close up of an Australian one hundred dollar note puzzle

Thirty-one years after the compulsory superannuation guarantee was introduced, the Albanese government is seeking to legislate the objective of super. A consultation paper titled Legislating the objective of Superannuation released by Treasury has sparked a national debate about the role, purpose and access to superannuation.



The compulsory superannuation guarantee (SG) was introduced in 1992 at a rate of 3%, increasing to 9% by July 2002. Currently 10.5%, the SG rate will increase to 12 per cent by 1 July 2025.

Australia’s superannuation pool has grown from around $148 billion in 1992 to more than $3.3 trillion. It now represents 139.6% of gross domestic product (GDP) and is projected to grow to around 244% of GDP by 30 June 2061.

Australia’s pool of pension assets is now one of the largest in the world, and the fourth largest in the OECD.

The average super balance in Australia is $150,000 – taking account of all those with a super balance including new entrants into the workforce. For those 65 and over, the average balance is around $400,000 across all income brackets.


The proposed objective

The proposed objective for which feedback is invited is:

The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

In an acknowledgement that there will be a range of views on the concepts included, the paper includes two alternative constructions:

  1. The objective of superannuation is to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
  2. The objective of superannuation is to support savings to deliver income for a dignified retirement, in an equitable and sustainable way.

The term ‘government support’ intends to encapsulate the broad range of supports available to retirees, including the Age Pension, Commonwealth Rent Assistance, and the Home Equity Access Scheme.

Stakeholder feedback can be submitted up to 31 March 2023.


Why do we need to define the ‘objective of superannuation’?

It is hoped that a legislated objective of super will guide future policy and successive governments.

The Consultation Paper notes that ’haphazard or inconsistent changes in superannuation system policy undermine the community’s trust in the system and increase costs to trustees, regulator, and ultimately members’.

“In 2023, we will try to end the super wars once and for all, and make sure that the future changes to the system are compatible with the main objective of super and doing that requires us to embed superannuation and its purpose into law,” Treasurer Jim Chalmers said at the Conexus Financial Political Series breakfast on 20 February.

Additionally, Chalmers noted that the government has no immediate intention to boost SG to 15 per cent. “That’s not something that we’re focused on or budgeting for in the near term – we think it’s important that we get to 12.”


Our thoughts

At first glance, the consultation paper sounds innocuous enough. But it seems the paper has opened a Pandora’s Box of what superannuation is not.

If superannuation is to “preserve savings”, that is, restricting access to superannuation savings to retirement only, by default it is not a means of accumulating wealth in a concessionally taxed environment. It is also not a strategy to manage intergenerational wealth.

The definition would also prevent initiatives such as the COVID-19 early access scheme used widely during the pandemic to give those in financial distress access to quick cash (over 3 million people withdrew $37.8 billion from their superannuation funds). And, it is not a method of purchasing a home sooner.

A secondary component of the consultation paper is nation building. At a recent speech, the Treasurer stated, “to my mind, defining super’s task as delivering income for retirement isn’t to narrow super’s role in our economy…it’s to elevate it, and broaden it.” The consultation paper states:

“There is a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the long-term investment horizon of superannuation funds.”

The consultation paper does not define how this ambition would be achieved. Watch this space.


Further help:

Please contact us if you require any clarification on SMSF or superannuation legislation. Our specialist Superannuation accountants have extensive experience in the tax and compliance issues specific to super and self-managed super funds. With our expert guidance, you’ll have peace of mind that you are ticking all the right boxes and avoiding any risk of non-compliance.

You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better. We’ll help you set goals for your business, devise an Action Plan to make them happen and meet with you regularly to ensure you stay on track.

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