A proposed statement outlining the objective of superannuation should be amended to better reflect elements such as insurance benefits, the Financial Planners Association (FPA) says in a submission.

A Treasury consultation paper has proposed that the objective should say super “is to preserve savings, to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

The FPA recommends using “to protect savings”, instead of “preserve”, which is associated with industry jargon and doesn’t reflect instances where insurance payments may be made prior to or during retirement due to injury or illness.

The group says a singular focus on the word “income” in the objective has led to mixed feedback.

“There is concern that basing the objective around ‘delivering income’ risks limiting the purpose of super to providing regular income payments in retirement as the only form of benefit payment permitted in the system,” it says.

“This could invite future policy restrictions on people accessing lump sums at, or in, retirement, or impact access to insurance benefits.”

The Financial Services Council (FSC) supports the concept “to deliver income” to highlight the system’s shift to a drawdown focus as people move into retirement, while suggesting an explanatory memorandum include wording to reflect existing features.

“Death benefits to beneficiaries, whether from an insurance payout or from excess superannuation savings left over on death, are an important feature of the current system and are consistent with the sole purpose test of a superannuation fund,” its submission says.

Insurance benefits that are provided through super also help to address the well-documented issue of underinsurance, it says.

“With respect to insurance benefits there is a need to review whether they are delivering benefits to consumers,” the FSC says. “We note a future review of group insurance settings in superannuation, as recommended by the Productivity Commission, will now benefit from the guidance of an objective of superannuation.”

The FSC suggests the proposed wording should be: “The objective of superannuation is to preserve individual savings to deliver income for a dignified retirement, alongside government support.”