The Financial System Inquiry (FSI) is an important piece of work and the Association of Superannuation Funds of Australia (ASFA) is pleased to see a government response in a timely manner.
"There is a large amount of detail in the government's response with many of the 44 responses impacting directly and indirectly on superannuation," said Pauline Vamos, CEO, ASFA.
"ASFA highlights the importance of the government's proposal to enshrine the objectives of the superannuation system in legislation. It is equally important that we consider measures of success."
"The superannuation system is one of the most highly regarded private pension systems in the world, but there is always room for improvement to ensure that it is sustainable and provides the best retirement outcomes for all Australians."
ASFA believes that success entails meeting the following benchmarks by 2050:
- less than 20 per cent of retired Australians relying solely or almost exclusively on the Age Pension
- Age Pension expenditure and tax expenditure on superannuation 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.
On the issue of choice and selection of default superannuation funds, Ms Vamos said:
"Choice and selection of default superannuation funds is a complex issue which requires a thoughtful and considered approach.
"The proposed review of selection of default superannuation needs to consider the effectiveness and potential of all options including tweaks to the existing arrangements.
"As the superannuation system grows and we mature as an industry, we have become more focused on developing measures of success as we are accountable to the whole community. ASFA developed a scorecard to measure the effectiveness of the system in our initial response to the FSI and we will continue to develop and improve this tool."
The government proposals also responded to the importance of the post-retirement phase of superannuation.
"In the context of our ageing population, the superannuation industry and the government must prioritise establishing an appropriate framework for managing people's superannuation not just in the accumulation phase but also after they retire. It is good to see the government's focus on retirement income products–this will help us to finish building the superannuation system.
"We look forward to working with the government on implementing these proposals to ensure they deliver to the full needs of Australians in retirement."
ASFA is the peak policy, research and advocacy body for Australia's superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.