Ex-RBA governor Bernie Fraser questions super aims

A key figurehead of Australia’s superannuation scheme has questioned the aims of a proposed objective for the nation’s retirement scheme, warning it may risk investor returns.

Former Reserve Bank of Australia governor Bernie Fraser. Picture: AAP

A key figurehead of Australia’s superannuation scheme has questioned the aims of a proposed objective for the nation’s retirement scheme, warning it may risk investor returns.

Former Reserve Bank of Australia governor and superannuation fund director Bernie Fraser said the government’s proposed objective for superannuation, announced on Monday, could cut across returns to savers and should allow for the purchase of a home.

His comments come as Jim Chalmers unveiled the government’s proposed draft purpose statement for superannuation, calling for the national retirement scheme “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

The Treasurer said Australia’s superannuation savings scheme offered “significant opportunity” to invest in areas “where there is alignment between the best financial interests of members and nat­ional economic priorities, par­ticularly given the long-term investment horizon of superannuation funds”.

Mr Fraser said he “can’t believe (Dr Chalmers) would be arguing for funds to invest in social projects, for example, which have pretty low returns … That would cut right across the thrust of investment by super funds to put the interest of the members very much to the fore.”

He said for a social investment strategy to be viable, federal and state governments would need to assist superannuation funds invest in “social projects”.

“I can’t believe the Treasurer is talking about making arrangements that would reduce their returns on investment unless it was to be something of the kinds that might be made with co-operation of other government levels that would jointly result in a return that was acceptable,” he said.

The consultation paper for the proposed superannuation objective notes government support, capturing the broad range of support available to retirees including the Age Pension and home equity access scheme.

The Morrison government launched the first-home super saver scheme in 2017, allowing home buyers to voluntarily contribute up to $15,000 each year to a total of $50,000 under the lower 15 per cent super tax rate.

Mr Fraser said the superannuation scheme should be opened further “for limited categories of people to draw upon a portion of their accumulated savings” outside any contributions to fund the purchase of a home.

“I can’t think of a more comforting thought of someone approaching retirement to know they have or will have by that time somewhere to live,” he said.

Former Australian Securities and Investments Commission deputy chair Daniel Crennan said he supported Dr Chalmers’ proposed objective for superannuation “as long as the … proposed change is consistent with the Superannuation Industry Supervision act”.

“I can’t imagine there’s too much controversy because the primary and only real purpose of the superannuation system remains provision of retirement income beyond government support,” he said. “I think ultimately everyone can get what they want but it probably does require some consultation and debate, in particular on what the word “sustainable” means and whether it is a licence to invest in what’s good for ‘people and planet’ but not … directly related to the obligation of the members’ best financial interest.”