Treasurer flags major change for $3.3 trillion superannuation industry

The Treasurer is about to reveal a major change he has been planning for an Australian industry worth $3.3 trillion.

Jim Chalmers will declare the “super wars” are over as he officially revives Labor’s plan to enshrine in law a narrow purpose for Australia’s $3.3 trillion retirement system.

The Treasurer will give a speech to the financial services industry on Monday to coincide with the release of a consultation paper on the proposal to legislate an objective for superannuation.

The paper proposes the following definition: “the objective of super is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

Legislating an objective for superannuation would make it more difficult for governments to implement policies to allow Australians to dip into their retirement savings early.

About $36bn of Australian retirement savings were withdrawn in early release schemes introduced by the Coalition during the pandemic.

In his speech, Dr Chalmers will say this was among the “most disastrous” policy proposals Australians have seen in recent years.

“Our predecessors were navigating the super landscape without a compass. This made us vulnerable to wrong turns and wrong decisions,” he will say.

“We’ll move to end the super wars once and for all. And make sure that future changes to the system are compatible with its very objective.”

Treasurer Jim Chalmers will outline his plans in a speech to the financial services industry on Monday.Picture: NCA NewsWire / Gary Ramage

As he pitches the proposal to the financial services sector, Dr Chalmers will also stress the need for super funds to keep up with changing investment priorities such as climate, the care economy and technology.

The government will be seeking feedback from Australians about the benefits, phrasing and implementation of an objective for superannuation through its consultation paper.

Labor’s plan to cement the purpose of superannuation in the law has resurfaced on and off in the past and eventually became one of the party’s commitments before the 2022 federal election.

The Albanese government is also eyeing a potential crackdown on holders of high superannuation balances amid calls to do away with tax concessions for people with more than $5m in super.

The release of the consultation paper comes after Labor’s first attempt at superannuation reform was voted down in the Senate earlier this month, in the first major defeat for the government in parliament.

The Greens, the Coalition and the crossbench teamed up in the upper house to topple controversial reforms that had abolished the requirement for super funds to publicly disclose donations and payments.

Labor said the changes would remove red tape and reduce the administrative burden on super funds.

But Senate crossbenchers and the Coalition were concerned the reforms weakened transparency and made funds less accountable to their members.

Originally published as Treasurer flags major change for $3.3 trillion superannuation industry