ASFA says super access for home deposit dicey


By Krystine Lumanta

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Allowing early access to superannuation for the purposes of buying a home or job training was likely to leave Australians with worse retirement outcomes, the Association of Superannuation Funds of Australia (ASFA) said yesterday.

Treasurer Joe Hockey last weekend said the government was prepared to look at a diverse range of proposals to help young Australians buy their first home by way of making the super system more flexible.

ASFA chief executive Pauline Vamos said such proposals had the capacity to have a drastic impact on their retirement outcomes as the compulsory super rate was not high enough to enable such a policy, the average super balance was also not high enough and similar schemes in other countries had poor repatriation rates.

“The current compulsory rate of the superannuation guarantee, 9.5 per cent, is barely enough to allow most people to build enough retirement savings to fund a comfortable retirement,” Vamos said.

“Raiding the nest egg early to pay for a home deposit or other purposes is likely to dramatically reduce people’s final benefits.

“We know the earlier you start saving for your retirement, the more you benefit from returns and compound interest.

“This works in reverse when it comes to taking money out of super – if you take it out at a young age, the more you lose these benefits and the more your final balance will fall.”

ASFA’s stance was echoed by Industry Super Australia chief executive David Whiteley, who called for the government to “categorically rule out” changes that weakened or severely hampered Australia’s compulsory super system.

“Compulsory super has generated around $1 trillion in additional savings that otherwise would not have been available for investment and provides over $70 billion in retirement benefits each year – double the cost of the pension,” Whiteley said.

“Super has taken the pressure off the government’s pension obligations by an estimated $6 billion per annum.

“Such proposals – allowing early access – are completely at odds with the objective of encouraging Australians to build private savings to take pressure off the aged pension. The government should rule out such proposals immediately.”

He added it could also inflate house prices.

In July, independent senator Nick Xenophon said he would introduce legislative changes in the spring session of parliament that proposed a scheme similar to that used in Canada, which allowed borrowers to borrow money from their superannuation account to help pay for a deposit, leading to improved housing affordability.

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