Superannuation must be detached from the short-term budget cycle and instead linked to a review and assessment process, such as the government’s Intergenerational Report, in order to minimise frequent changes to the system, a sector executive has said.
SMSF Association head of policy Jordan George said enshrining the objectives of superannuation in legislation was an admiral goal, one which was also backed by federal Treasurer Scott Morrison and federal opposition financial services and superannuation spokesman Jim Chalmers at the recent SMSF Association 2016 National Conference in Adelaide.
“But what I wonder about is what is the practicality of having some very high-level statements in law stopping governments raiding super to fill holes in the budget,” George said.
“I think the more important thing in setting the objective is actually trying to remove superannuation policy decision-making from the budget cycle.
“That’s why we [the SMSF Association] have recommended that a more appropriate way to make superannuation policy decisions is to maybe link it to something like the Intergenerational Report, which is published every five years.
“So every five years you can have a stocktake: stop, have a look at how the system has been performing for the last five years, do we need to tweak it, does it need adjusting. If yes, let’s do that now. And so super is not used to fill revenues or fill holes in the budget.”
According to George, by limiting super changes to five-year periods, Australians would have a lot more certainty with their retirement planning.
“And you could really [get the message across] that super is not part of the budget cycle,” he said.
“Super is a tax construct, let’s be honest. So it’s always going to be tweaked around the tax side of it more than anything and that’s always going to be of interest to the government.
“So if we take it out of the budget cycle, I really think that’s where we can achieve some stability.”