Superannuation policy

19.11 In 2009, the Australian Government commissioned a review into the governance, efficiency, structure and operation of Australia’s superannuation system. The final report by the Super System Review Panel was released on 5 July 2010. The Government’s response to the Review, Stronger Super, introduced a range of reforms to the superannuation system including MySuper and SuperStream.^[8]

Superannuation principles

19.12 In the course of the Super System Review, the Review Panel formulated ten superannuation principles as the ‘guiding principles by which policy is developed in relation to superannuation generally’.^[9] A number of principles are of particular relevance to this Inquiry, including the need for: a well regulated superannuation system in which members can have confidence; a system which allows and respects individual choice, but also recognises associated increased responsibility which comes with that choice; and for superannuation-related decision making to be taken with a long term perspective.^[10] These principles provide a useful touchstone for this chapter, in addition to the key themes articulated in Chapter 2.

Purposes of superannuation

19.13 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.^[11]

19.14 In the course of this Inquiry, two of these pillars are considered—this chapter focuses on superannuation and Chapters 5–9 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.

19.15 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.^[12]

19.16 A number of key policy tensions have emerged in the course of this Inquiry with respect to family violence and superannuation.

19.17 First, superannuation is generally provided through a trust structure where trustees hold the superannuation funds 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 of members, 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 proper role of trustees in the context of superannuation fund management.

19.18 Secondly, a tension exists between the need for a well-regulated superannuation system on the one hand, and the need for individual choice with respect to, for example, contributions splitting or the type or management of superannuation funds. This tension is particularly evident in considering SMSFs in light of suggestions about the power imbalances often present in SMSFs.

19.19 The third 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.