National Reform Summit puts superannuation in the spotlight

The Association of Superannuation Funds of Australia (ASFA) today said that the open discussion and high-level consensus by a broad range of stakeholders in the Australian community at this week’s National Reform Summit is positive for superannuation.

ASFA has previously advocated for a considered approach to changing the superannuation system and believes that the goals, challenges and high-level reform principles outlined in the National Reform Summit communique are an accurate framework for the discussion.

“It is great to see the many stakeholders of superannuation and retirement income coming together to discuss the overarching principles of the system, along with the goals and challenges moving forward,” said Pauline Vamos, CEO, ASFA.

“However, I do believe that we need to acknowledge that there are many areas in which the system is not deficient and others that should be prioritised. It is important to focus resources where the system needs improvement.”

ASFA believes that the system is already broadly meeting its objectives as determined by the Financial System Inquiry: to provide income in retirement to substitute or supplement the age pension.

Long-term success entails meeting the following benchmarks by 2050:

• less than 20 per cent of retired Australians relying on the Age Pension (solely)
• Age Pension expenditure and tax expenditure on super of less than six per cent of GDP
• Australians retiring with an income replacement rate in retirement in excess of 65 per cent
• at least 50 per cent of Australians able to cover their expenditure in retirement and have a ‘comfortable’ retirement lifestyle.

“We have reviewed the current system against its high-level goals and objectives and outlined our recommendations for change in our submissions to the government’s Tax White Paper,” added Ms Vamos.

“These include putting a cap on full tax concessions afforded to those with very large super balances and also exploring ways to increase flexibility in the system to give those with broken work patterns greater access to tax concessions.”

“Overall, the system is on track to provide better retirement outcomes for Australians and while there are improvements that should be made, the system does not need and should not be radically restructured today. The National Reform Summit is part of an important conversation and I hope to see further collaboration and discussion between key stakeholders in the coming weeks,” Ms Vamos concluded.