Politically driven raids on the nation's $3.5 trillion pool of superannuation savings should become more difficult under draft changes unveiled by the federal government.
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The government has published draft legislation setting the purpose of superannuation to "preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way".
The change would mean any future changes to superannuation would have to be assessed for compatibility with the objective and be accompanied with an explanatory statement.
It follows the previous government's move during the COVID-19 pandemic to allow people to withdraw up to $20,000 of their super savings. Around 3.5 million people applied to be part of the scheme and in total $36.4 billion was withdrawn.
There have also been calls to allow people below retirement age to access super to help fund house purchases.
Treasurer Jim Chalmers said legislating the objective of super would "give confidence to the super industry and peace of mind to Australian workers that we'll do everything we can to safeguard their savings to deliver income in retirement".
Dr Chalmers said the COVID early release scheme had resulted in "devastating impacts on the savings of tens of thousands of Australians".
Industry Super Australia welcomed the proposed legislation, arguing it would reinforce the purpose of superannuation and protect retirement savings.
Preserving savings to later in life was critical to securing a better standard of living in retirement, the organisation said. "Busting open super early dramatically unravels compound returns and harms a person's quality of life in retirement."
"This proposal is in lockstep with the expectations of the community. Super is there to help provide working Australians with certainty and stability in retirement," ISA deputy chief executive Matthew Linden said.
"The principle of preservation is the cornerstone of our world-renowned super system. Without preservation, workers miss out on the benefits of compounding interest - which has seen the growth of super savings consistently outpace other asset classes."
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According to the Intergenerational Report, Australia will be the only advanced economy to see a reduction in spending on the aged pension over the next 40 years, because of the superannuation system.
Despite the aging population, which will include a doubling of the number of those aged 65 years or older by 2062-63, Treasury projects the proportion of retirees on the aged pension will be 15 per cent lower than now.
Adrian Rollins
Adrian Rollins is economics correspondent for the Canberra Times
Adrian Rollins is economics correspondent for the Canberra Times
