The Objective of Super: continuing the conversation
Regulatory -
Legislating the Objective of Superannuation
The current Australian Government consultation regarding the objective of superannuation has focused industry minds on the purpose of the system: what is superannuation for, and what is it not for? The Government has proposed an objective that finds this purpose in retirement:
The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
Thinking more broadly than just retirement
TAL supports this objective. We acknowledge that for superannuation members, retirement is the main point of their membership, and the objective accurately captures this.
However, not all members can work through to retirement. For some members, injury, illness and death intervene before they make it to retirement age. For these members, insurance provides a vital safety net, stepping in to support them when they and their families are at their most financially vulnerable.
Contributing to the conversation
For this reason, TAL has written a submission to the consultation recommending for the Australian Government to recognise the integral role insurance in superannuation plays within the superannuation system.
Key concepts within the proposed objective link strongly to insurance. For example, the concept of preservation. Insurance benefits paid to a member who is unable to work help protect the members superannuation savings for later use in retirement. This further helps members to have a dignified retirement, which is another part of the draft objective.
Equity and sustainability are essential
Insurance is also consistent with the concepts of equity and sustainability included in the proposed objective. Insurance supports equity by ensuring the superannuation system is inclusive of all system participants, including those who are unable to work through to retirement. This is important in a mandatory system. In respect of sustainability, insurance benefits reduce individual reliance on community and government provided benefits, while promoting individual self-reliance.
In our submission, TAL supports the proposed objective but calls for the Government to recognise the important role of insurance in superannuation when it takes legislation to Parliament. Specifically, we want to see insurance in superannuation referenced in the explanatory memorandum that explains the ideas in the objective.
Recognising the importance of insurance in super
The consultation period ended on 31 March 2023 and all submissions have been published on Treasury consultation website.
You can request a copy of our submission below.