A consultation paper released by Treasury has sparked a national debate about the role, purpose and access to superannuation ahead of
the 2023-24 Federal Budget.
What is the purpose of superannuation? At first glance, the consultation released by Treasury in February titled Legislating
the objective of
Superannuation sounds innocuous enough. The consultation seeks to anchor future policies relating to superannuation to a legislated objective:
The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside Government support, in an
equitable and sustainable way.
But what seems self-evident 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 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.
As an aside, the Treasurer points out that 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.
Superannuation and national building
The second component of the Treasury consultation 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 states:
The Federal Budget is released on 9 May 2023. Look out for our
update with all the relevant news to you, your business and your super.
We provide strategic business and tax advisory, underpinned by our expertise in financial planning to ensure we develop financial structures that are smart and well considered.
Treasury has released exposure draft legislation for Payday Super that will require employers to pay superannuation at around the same time as salary and wages are paid to the employee. The changes are proposed to commence from 1 July 2026.
