Aged Care, Superannuation

ASFA rejects aged-care ring-fencing

ASFA Aged care superannuation

The notion of ring-fencing a segment of an individual’s retirement savings to fund aged care has not been supported by ASFA

The Association of Superannuation Funds of Australia (ASFA) has opposed the suggestion to mandate a portion of an individual’s retirement savings to fund the country’s aged-care sector.

The superannuation industry peak body communicated this position in its submission to the federal government’s Aged Care Taskforce, noting such a change would disadvantage superannuants on several levels.

“Calls to ring-fence superannuation for increased aged-care costs would create unnecessary complexity and cost and reduce flexibility for older Australians,” ASFA deputy chief executive Glen McCrea said.

“Many current retirees do not have a large amount of superannuation from which to fund increased aged-care costs. In fact, only a small minority of Australians aged over 80 have any superannuation at all.”

While opposing the proposal to ring-fence a segment of an individual’s superannuation to fund aged care, ASFA did suggest an alternative strategy to achieve the same aim.

To this end, it made the call to have superannuation funds provide investment capital for the aged-care sector and potentially hold property assets, either directly or indirectly, that can in turn be used as the location for aged-care facilities as long as the arrangement was executed on commercial terms.

It also made the suggestion to have specific real estate investment trusts (REIT) that can be used to develop and own aged-care premises. Under this type of program, superannuation funds would invest in the REITs as long as they possessed an appropriate risk and return profile for members.

In making its submission, the industry body acknowledged a current characteristic of the aged-care system that has not been discussed widely, but was revealed in ASFA research, namely aged-care residential accommodation deposits outweigh unused superannuation benefits by a factor of three to one as a significant source of inheritances.

The Aged Care Taskforce will publish its findings later this year.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital