19.10 In the course of the Super System Review, the Panel formulated ten superannuation principles to be the ‘guiding principles by which policy is developed in relation to superannuation generally’. The principles of relevance to this Inquiry include:
Superannuation must always be for the benefit of members.
The superannuation system needs to be well‐regulated to address prudential and other risks so that members can have the confidence to invest their retirement savings for their long‐term financial benefit.
Individual choices for members should be available and respected, but members must recognise and accept the increased responsibility that comes with making those choices.
The superannuation system must be supported by high quality research and data, as well as by intermediaries with high professional standards.
Superannuation is a large and complex system with an increasingly important social and macroeconomic dimension. It must be regulated and administered coherently and rule changes, including to taxation rules, should be made sparingly and in a way that engenders member confidence.
The system must have sufficient flexibility to accommodate its inherent growth path and should strive for continual improvement, rather than abrupt changes. Where possible, government and trustee decisions about superannuation should be taken with a long‐term perspective.
19.11 These principles provide a useful touchstone for this chapter, in addition to the key themes articulated in Chapter 2.
Purposes of superannuation
19.12 The primary aim of the superannuation system is to ‘deliver private income to enhance the living standards of retired Australians’:
Successive governments have committed to the ‘three pillar’ framework as the underpinning of Australia’s retirement incomes policy, blending near‐universal employee participation in the superannuation system with an adequate social security safety net and incentives for discretionary savings by individuals beyond the employer‐mandated levels.
19.13 In the course of this Inquiry, two of these pillars are considered—this chapter focuses on superannuation and Chapters 5–8 consider family violence in the context of social security. However, to the extent that some of the issues raised in this chapter relate to provision of early access to superannuation, essentially as a form of supplementary income support, early access should be considered in the broader context of the adequacy of current social security measures and should be seen as a last resort for those experiencing financial difficulties.
19.14 Key stakeholders in this Inquiry have also consistently emphasised the policy aims underlying the superannuation system, expressing the view that, for example:
Permitting individuals to use superannuation savings for other purposes … would be poor public policy and contrary to the government’s retirement incomes policy and the intent for which tax concessions are given to superannuation savings.
19.15 The two key policy tensions that have emerged in the course of this Inquiry with respect to family violence and superannuation relate to the two parts of this chapter—the first relates to superannuation and coercion, the second to early access to superannuation.
19.16 First, superannuation is generally provided through a trust structure where trustees hold the superannuation on behalf of members. As a result, trustees owe members a fiduciary duty to act in the best interests of members while managing the superannuation fund. However, in the context of family violence, a question arises as to the extent of the obligation owed by trustees to members and as to how any such obligation should operate in practice. For example, should a trustee be obliged to inquire as to the motivation behind superannuation-related decisions, in the event that, for example, they are the result of coercion arising from family violence? The tension here is between the duty to act in the best interests of members, and the limits imposed by resources, experience and expertise of trustees.
19.17 The second key policy tension arises between the need to preserve superannuation benefits until retirement and the need, in limited circumstances, to allow early access to superannuation funds. This tension is discussed in more detail in the second part of this chapter.