In a past Actuaries Digital issue, Geoff Dunsford wrote to the editor giving his opinion "on feedback the Institute provided to the Government on its March Discussion Paper on the Objective of Superannuation."

Among the things he said were:

" The Actuaries Institute letter suggested that one of the objectives of superannuation should be “To supplement the Age Pension in order to provide a combined level of income that allows Australians to live a dignified retirement”.

This statement suggests that the Age Pension is a fixed (universal) amount, whereas for most people on retirement, and for many years after, it will only be a part pension they receive. This is provided in accordance with the Means Test rules then current and there are no guarantees how these might change from time to time –  for then existing pensioners as well as new ones. To suggest that a part pension is the primary element in the superannuation system is arguably misleading. "

Andrew Boal, Convenor of the Institute's Superannuation Practice Committee (SPC), replied and among the things he said were:

" I can confirm that the Actuaries Institute statement does not suggest the Age Pension is a fixed (universal) amount as we clearly understand and agree that for most people on retirement, they will only be eligible for a part pension. Also, the Actuaries Institute has not suggested that the part pension will be the primary element in the superannuation system. "

I believed Andrew is missing the point. Yes, the institute didn't explicitly say that part pension will be the primary element but the usage of the word "supplement" implies so.

Conventionally, supplements means to add to something bigger or more important. For example, income from my actuarial services supplements my rental income since the latter is the primary source of income. Incidentally, this does not violate dictionary's definitions but merely a subset of them.

Yes, by strict definition, the institute is correct to use it as above without inferring the difference in size between superannuation and Age Pension. However, remember that this concerns all working Australians and usually people in general will adopt conventional definition. So given how all actuaries are trained to consider the various stakeholders involved in an issue and that we must consider perception as well, I am surprised the choice of word the institute has chosen.

Maybe a better word is "complement" or reword the objective entirely and use the word "add" or "in addition to".

I am also surprised at the rather defensive tone the convenor had taken in his response.
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