The Morrison government has promised significant superannuation changes as part of its election campaign, but a number of industry bodies have pointed out negative repercussions that could undermine the purpose of retirement savings.
The Financial Services Council (FSC) noted the proposed Super Home Buyer scheme, which would allow a deposit via a superannuation fund, could force up to 5.3 million Australians to choose between owning a home or a dignified retirement.
“The FSC is concerned the government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement,” FSC chief executive Blake Briggs said.
“The government’s supply measure only extends downsizing to 1.3 million households, whilst potentially allowing approximately 5.3 million under 35-year-old Australians that do not yet own a home access to their superannuation to buy a first home.
“The government’s own majority report into housing affordability and supply in Australia concluded that superannuation should only ever be used for housing if there were commensurate measures to increase supply.
“The FSC recognises there is a correlation between renting in retirement and poverty amongst older Australians, but Australians should not have to choose between a home and their retirement savings.”
The Association of Superannuation Funds of Australia (ASFA) also stated the proposed scheme would damage the purpose of super and additionally increase housing prices, pointing to its own research from March 2021.
“The early release of superannuation for housing is not a panacea, is not in line with the objectives of the system and will have long-term consequences for retirement incomes,” ASFA deputy chief executive Glen McCrea said.
However, McCrea added the association supported the government’s proposed downsizer measures to help increase housing supply for families and lift retirement balances.
SMSF Association deputy chief executive and director of policy and education Peter Burgess said the industry body supports the downsizer measures and their aim to increase contribution flexibility.
“This measure is most likely to benefit clients who have already used up their non-concessional contribution caps for the income year or who had a total super balance in excess of the general transfer balance cap – currently $1.7 million – at 30 June prior,” Burgess said.
“The ability to make a downsizer contribution, which doesn’t count towards their non-concessional contributions cap, means they still have the ability to add sizeable amounts to their super savings without triggering an excess contribution.”
