Using superannuation savings to fund aged care or other government measures would contradict the original purpose for which super funds were established, according to the Institute of Financial Professionals Australia (IFPA).
IFPA head of superannuation and financial services Natasha Panagis pointed out the issue has gained prominence as conversations have become more prevalent regarding the expenses associated with ensuring high-quality aged care in Australia in the future.
“This has all come about because aged care is the fourth largest payment program for the government and with our ageing population, the government is now looking at better ways to fund quality aged care and it’s becoming quite an urgent policy problem for the government,” Panagis told attendees at an IFPA webinar today.
As such, superannuation savings have been flagged as a possible source of income to support the provision of aged care, a move which she suggested is not aligned with the common perception of the objective of super.
“Assistant Treasurer Stephen Jones did say this is a conversation that we need to have around super and it is there to fund your retirement income, and the government has said they will consider super as part of this conversation,” she said.
“In my view, continually making changes to super policy to fund government items is dangerous.
“Again, it comes back to this whole objective of super. [We believe] super should be aimed at providing income and benefits to individuals and their dependants on retirement and shouldn’t be used by the government to tap into to fund any short or long-term policies they might have.
“I don’t think it’s necessary to mandate or legislate changes to compulsorily ring-fence super to fund aged care.”
She added superannuation is already, in effect, funding the costs of aged care as many retirees currently used super funds to support these expenses.
“You would typically expect that super or a person’s pension would be used towards aged care. They would make that decision or consideration as to whether they do make withdrawals from super or they make commutations from their pensions to pay for any aged-care costs that they may have,” she said.