An end to ad hoc, populist and rushed policy changes to super by government is being called for by Tom Garcia, chief executive of AIST.
The urgency of this call comes a week after the treasurer Joe Hockey floated the idea of using super to help young people pay for their home or HEC debt. Garcia backs the Financial System Inquiry panel recommendation to enshrine the objectives of superannuation in legislation as a way of avoiding such naive policy decisions.
In a proactive step, the AIST has also teamed up with Mercer to assess what policies will best improve the equity of super tax concessions as part of its new Super Tracker partnership. Further research from Super Tracker is intended to influence government policy towards a long term strategy and measurable KPIs.
“We must put an end to policy changes that are ad hoc, populist or rushed by government,” says Garcia. “Only once we have agreement on super’s objectives can we then properly assess policy proposals against fairness, adequacy and sustainability and have a proper debate.”
Garcia called Hockey’s most recent proposal as “plain silly” and listed other recent rash proposals as the call for a national default auction system; the banning of lump sums; compulsory annuitisation; forcing super funds to invest in infrastructure or to support ailing manufacturing industries.
He proposed that instead of using super to help young people into the property market, the government might consider ways to make it easier for superannuation funds to invest in more affordable housing. “The super system needs to be managed in the same way as major companies are managed – that is, according to measurable, long-term strategic goals,” says Garcia.
In line with this Garcia wants national conversation around the retirement and preservation age. He said raising the retirement age to 70 would be unfair on those that have spent their entire working lives on their feet. “We need to look at how we can re-train older workers, encourage people to stay employed in something new,” he says. “
We need to recognise the diversity of the older workforce.”