David Murray's super objective 'plea'

The legislated objective of the $2 trillion superannuation system should not include references to achieving "comfort" or "adequacy" because it would open the way to constant political interference, David Murray says.

Mr Murray, the former head of Commonwealth Bank and chair of the Financial System Inquiry, urged the federal government not to give in to pressure from the super industry.

Industry bodies have joined forces to push back at the government's proposed objective, which is to "to provide income in retirement to substitute or supplement the age pension".

It was Mr Murray who proposed the definition in his FSI report.

"My plea today is not to complicate the objective in legislation," he told a retirement income policy conference in Canberra on Wednesday. "Please support a simple, clear, unqualified objective."

Industry groups want the legislation to refer to the provision of a "comfortable" lifestyle, which in today's dollars means an annual income stream of $43,062 a year for singles.

This implies a level of government-mandated support for super, via tax concessions, that is much higher than the age pension, which at present is $19,200 a year for singles.

'Never-ending debate'

Mr Murray said inserting into legislation a dollar amount or some other proxy for adequacy would stir never-ending debate about where that benchmark should be set.

"The objective can't contain a specific promise," he said.

"By trying to decide what is and isn't adequate we would be going back to the politics and leave the system in continual questioning about that.

"A debate about adequacy becomes a debate about social equity."

Nor should the objective set down the super guarantee, which is the compulsory contribution amount that employers pay, Mr Murray said. This should be set within workplace agreements and by politicians, he said. The present rate is 9.5 per cent but it is legislated to rise to 12 per cent.

A letter to the government signed by Association of Superannuation Funds of Australia, Industry Super Australia, the Australian Institute of Superannuation Trustees and SMSF Association said the legislation should make clear that the "core purpose of the superannuation system is to deliver income which affords a comfortable standard of living in retirement, over and above what the age pension delivers".

Third tranche on way

At the Committee for Sustainable Retirement Incomes conference earlier in the day, Revenue and Financial Services Minister Kelly O'Dwyer said the government would release a third tranche of super laws before the end of the week.

The legislation relates to changes announced by the federal government in the May budget. Under pressure from the backbench, the Turnbull government recently altered plans for a $500,000 lifetime cap on non-concessional super contributions.

Ms O'Dwyer reaffirmed the government's commitment to adopt Mr Murray's proposed objective as a starting point.

"The government agrees with the Financial System Inquiry about the importance of enshrining a clear objective in legislation, and is currently consulting on a draft bill and I know that many of you contributed to the consultation process," she said.