We believe that stating the objective for superannuation in isolation is a second-best solution. Income in retirement is supported by the pillars of social security payments (including the age pension), superannuation drawdowns, and assets outside of superannuation (including, most notably, housing). Further, these pillars interact and should ideally be viewed holistically. Treating any one in isolation is undesirable. Accordingly, a more general statement around the objectives of the retirement system would have been preferable, although probably a bridge too far at the present time.
Nevertheless, establishing a clear objective for the superannuation system is worthwhile. CIFR believes the main advantage in doing so is to act as a shield against using the system for inappropriate purposes. Indeed, what is ruled out by the objective might be more important than what the objective explicitly permits. Given this, and the fact that an objective is being stated for just one component of a broader retirement system, we recommend the following:
1. A simple statement of objective that is consistent with the objectives of the broader retirement system.
2. A supplementary list that explicitly recognises some of the potential uses for superannuation that the statement of objectives is intended to rule out. This list might be indicative, and need not be comprehensive.