The submission stated that a question of equity might arise over the longer term when wealthier Australians are able to fund future lifestyles from their retirement savings, while less wealthy Australians have much lower levels of retirement incomes as a consequence of having accessed these funds prior to retirement.

It also noted that a key finding of the 2021 Intergenerational Report was that Australia’s dependency ratio, a key measure of Australia’s ability to fund retirees and other non-working Australians from taxpayers, is forecast to reduce from four today to 2.7 in 2061.

“The added pressure of accessing savings designed for retirement comes at a time when the superannuation system has been subject to other early access measures which are not generally regarded as retirement-related, such as the First Home Super Saver Scheme,” it said.

The submission stated that while there are other jurisdictions that use retirement income systems for non-retirement-related purposes, such as housing or health insurance, the retirement outcomes for these systems are suboptimal compared to systems that restrict retirement incomes to retirement only.

“We note that other jurisdictions with top performing retirement income systems, such as Denmark and the Netherlands, are solely dedicated to retirement savings,” it stated.

An appropriate definition of retirement, it stated, will assist in more careful consideration being given to whether the superannuation system should be accessed in times of crisis.

“A definition could also assist in the design of potentially more appropriate policies to help households respond to future shocks,” it said.

“We consider that the formulation of an objective of superannuation would also assist in determining when policy is at odds with the reason why Australia’s superannuation system exists.”

The submission also noted that there are several other issues affecting savings and investment, which were highlighted by the intergenerational report.

These include the need to increase workforce participation, in order to combat the declining dependency ratio and the difficulty in accessing financial advice for both retirees and working Australians, it said.

It also stated that there is an emerging need to support and encourage innovation and increase productivity through targeted investment incentives.

The submission also pointed out the increasing cost to superannuation funds of measures to comply with the law.

“CPA Australia has been, with other peak accounting, tax, financial advice, superannuation and actuarial bodies, in dialogue with both government and regulators regarding the 2019 expansion of the non-arm’s length income and expenditure (NALI/E) provisions,” it said.

“We consider the intent of the expansion to be correct. However, our overarching concern is that the ATO’s interpretation of the law means that, rather than merely addressing the mischief at which the government policy was directed, the rules could result in unwarranted substantial and long-term detriment to fund members – in particular the potential for tax at the non-arm’s length rate of 45 per cent on all fund income.”

The expansion of the NALI/E provisions could also operate in conflict with a range of trustee obligations, including the newly enacted best financial interests duty (BFID) rule in the Superannuation Industry (Supervision) Act 1993, the submission stressed.

The submission said the government might also wish to consider incentives to encourage savings outside the superannuation system.