Australian Retirement Trust fund boss Bernard Reilly backs cap on super balances

The boss of Australia’s second-largest superannuation fund has backed a cap on super balances to prevent savings from being used as an ‘inheritance for your kids’.

Key government frontbenchers have signalled they are looking at a possible $3m cap on the amount of money that can be held in superannuation.

The boss of Australia’s second-largest superannuation fund, the $240bn Australian Retirement Trust, has backed a cap on super balances to prevent savings from being used as an “inheritance for your kids”.

ART chief executive Bernard Reilly told The Australian the introduction of a cap was a “natural” step, but that any limit on balances – along with other major changes to the super system – would need to have a proper transition period.

Key government frontbenchers have signalled they are looking at a possible $3m cap on the amount of money that can be held in superannuation – despite assurances from Anthony Albanese before last year’s election that a Labor government had no plans for any major changes.

Australian Retirement Trust CEO Bernard Reilly. Picture: Dylan Coker

The government is linking the debate around caps on superannuation balances with its proposed introduction of legislation that aims to define the purpose of superannuation, but has indicated that changes could be made as early as the upcoming budget in May.

In an interview with The Australian to mark the first anniversary of last year’s merger between QSuper and Sunsuper which created ART, Mr Reilly said, “The purpose of superannuation is for us to save for our retirement”.

“We save the money and get a tax break to do it in a tax effective way. If you leave it as an inheritance for your kids, that is not what it was designed for … If you think about it that way, then some form of cap becomes natural.”

The remarks triggered a rebuke from opposition treasury spokesman Angus Taylor who said, “These are Australians’ savings – not the government’s and not the fund managers’”.

“How Australians choose to use their retirement savings is a matter for them,” Mr Taylor said.

“It’s not the role of government to tell people they can’t give their retirement savings to their families. The Treasurer needs to immediately rule out these sorts of major changes and provide certainty to Australians planning their retirement.”

Mr Reilly, who was the chief executive of Sunsuper before the merger, which was formalised on February 28 last year, said he did not want to give an estimate of what would be an appropriate amount of money in superannuation.

He cautioned that if caps on the amount of money that could be held in super were imposed, the government would need to be careful about how quickly it was introduced.

“The challenge is that people have been saving for their retirement for a long period of time,” he said. “How you introduce it and how you transition to the new architecture will be really important.”

Assistant Treasurer Stephen Jones last week said that superannuation funds with huge savings of up to $100m were not about providing income for retirement. “It’s about tax minimisation, it’s about estate management, it’s about something else,” he said. “Come on. Fair go.”

Mr Reilly said ART, which has 2.2 million members, was getting increasing inquiries from its members as a result of the debate around the legislation for the purpose of superannuation.

“Over the last two weeks we have been getting queries from members about the purpose of superannuation and the speculation (about super) which we are hearing in the press,” he said. “In the last quarter of last year, we saw a 20 per cent increase in engagement from our members because of the volatility which has occurred in the markets. Members are worried about their balances.”