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Treasury this week has released a draft proposal for the objective of superannuation in a consultation paper, which it intends to legislate once consultation has been completed.

The proposed objective it “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”

The Australian Institute of Superannuation Trustees (AIST) welcomed the proposed definition of the objective of superannuation and the launch of the consultation process.

AIST chief executive Eva Scheerlinck said the government’s release of the proposed definition and the start of consultation was an important step in legislating the objective for Australia’s $3.3 trillion retirement savings system.

“We believe the legislating of an objective is important and long overdue, and the proposed objective released today for consultation is promising,” Ms Scheerlinck said.

“The definition recognises the centrality of preservation of superannuation benefits until retirement, equity in the system and the important role superannuation plays in providing a dignified retirement.”

Ms Scheerlinck said these are the types of characteristics that AIST is seeking to enshrine so that the system looks after the needs of all Australians, including women, lower paid workers and vulnerable people.

“We’ve seen the damage that the COVID-19 early-release scheme did to the retirement savings of thousands of fund members, many of whom are people who could least afford to see their retirement savings depleted.”

“Superannuation is for retirement, not a piggy-bank to be opened when convenient, so legislating an objective will help to protect super from interference in future.”

AIST plans to consult with its members about the paper and the proposed objective.

The Association of Superannuation Funds of Australia (ASFA) also endorsed the government’s proposed objective of superannuation, describing it “as an inflection point in the evolution of Australia’s retirement income system”.

“The proposed Objective places preservation, retirement income, equity, sustainability and a dignified retirement at the heart of superannuation policy while recognising the ongoing role of the age pension,” said ASFA chief executive Dr Martin Fahy.

“As the largest defined contribution pension system in the world, this objective offers a retirement aspiration which is fit for purpose, and worthy of our commitment to a future where all Australians can face into retirement with confidence.”

Dr Fahy said the proposed objective can “underpin much needed policy stability and help anchor future policy debates in ensuring our age pension remains affordable, that superannuation savings are preserved to retirement, and that the system delivers in an equitable manner for women and low-income earners”.

“ASFA has been strongly committed to the formalisation of an objective for superannuation that holds stakeholders across the system accountable for the long-term retirement outcomes of Australians and which encourages stability in the policy settings,” he said.

The SMSF Association said it was pleased to see the concept of a “dignified retirement” included as part of the proposed objective.

SMSF Association chief executive Peter Burgess said this is something the Association has long advocated for and is pleased to see this concept forming a central plank of the Government’s proposed objective for superannuation.

Mr Burgess noted that having an objective for superannuation since it was first recommended in the 2014 Financial System Inquiry Final Report.

“The government’s decision to open up the proposed definition of the objective of superannuation for public consultation is a positive step in finally achieving this critical recommendation.”

“We look forward to working with the Government to ensure the legislated objective achieves these important goals.”