The Financial Advice Association Australia (FAAA) has voiced their support for the proposed legislation of an objective of superannuation during the government’s latest round of consultation.
In a statement to Treasury, the body wrote: “The FAAA supports the defined objective of superannuation. Our members play a critical role in ensuring Australians understand, trust and effectively make use of our world-leading retirement system that ensures our citizens can retire and age with dignity and confidence.”
The FAAA, in the form of a joint submission from the then Financial Planning Association (FPA) and the Association of Financial Advisers (AFA), raised a number of concerns in its submission in March.
Since then, Treasury has said that the draft legislation and explanatory materials within the new round of consultation reflect the feedback received from stakeholders.
The proposed objective of superannuation is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
In a follow-up submission in September, FAAA clarified that a number of statements made in the latest explanatory materials have helped to address its concerns, including the phrasing of “preserve savings”.
Namely, the FAAA identified within the material that members will maintain recourse for early access to superannuation for genuine and exceptional hardship, which will not be changed by legislating the objective of superannuation.
“Paragraph 1.32 specifically refers to accessing insurance payments and financial hardship provisions, and confirms that the bill will not impact the existing legal framework that supports consumers’ access to their superannuation in unforeseen and exceptional circumstances,” it wrote.
Reiterating their initial sentiment that members be placed at the centre of the objective, the body supported the government in later clarifying that superannuation savings solely belong to the member.
“This is a central and important element of the entire regime and critical to supporting ongoing consumer confidence in the system, and we are pleased to see this clearly and specifically acknowledged,” the FAAA noted.
Other elements that were clarified in the subsequent exposure draft, according to the FAAA, was the acknowledgement that “dignified” is a subjective concept that may allow individuals to apply their own values and judgments about what it means, and that no restrictions apply for the type of spending a consumer may choose to use their superannuation to support.
Beyond the content of the explanatory memorandum, the FAAA reinforced a point made in its earlier submission, wherein the super system should be “managed with a long-term perspective and not be subject to short term changes”.
“It is essential that the superannuation system is sustainable over the long term, and any changes require evolution, rather than surprise short-term changes that undermine confidence in the system as a whole.
“The confidence of Australians in the superannuation system is critical to its success.”
Adding income into the objective is a path to mandating annuities