Retirement
Should home ownership be part of superannuation?
Liberal MPs have discussed the idea of overhauling the retirement system, with home ownership becoming the cornerstone of retirement under their proposal.
Should home ownership be part of superannuation?
Liberal MPs have discussed the idea of overhauling the retirement system, with home ownership becoming the cornerstone of retirement under their proposal.
Liberal politicians, including Tim Wilson, are in support of superannuation being used to help first home buyers get into the property market by allowing members to dip into their superannuation account.
Over the weekend, Tim Wilson told Jane Caro that superannuation should be used to help investors get onto the market, despite a growing number of older women lacking retirement funds and ending up on the streets.
Despite the potential of rising house prices through a scheme that allowed investors to access their superannuation and a raft of negative comments online, Mr Wilson has since doubled down on his statement, saying that it’d be easier for people to buy a home if they can access their super.
“Not owning your home is one of the biggest determinants of poverty in retirement. And it disproportionately impacts women,” he tweeted. “And because we prioritise super over home ownership, we fuel it. It is wrong.
Liberal Member Andrew Bragg has previously come out advocating for superannuation to be used to help first home owners get onto the market.
But the former Liberal Party director and senator noted in his book, Bad Egg: How to Fix Super, that the Prime Minister should overhaul the system that he argues is gouging workers with high fees.
“The system costs more than it saves. There should be more flexibility. Australians should be allowed to access super for a first home, a home is more important than super,” he said.
Senator Bragg previously stated he wants to give more Australians the ability to have SMSF-style flexibility in their superannuation, including by increasing the maximum number of fund members from four to six.
About 13,800 of the applications for early withdrawal were from self-managed super funds, data from the ATO shows.
“I know a lot of people will be expecting me to say we should abolish super; I don’t think we should. I think the idea is very good, but I do think the execution has been poor,” Mr Bragg said.
However, the ACTU has hit out against this plan, stating Australians should not have to choose between a dignified retirement and home ownership.
The Morrison government’s ‘early access to superannuation’ program has already taken $42 billion from workers’ super accounts, with 600,000 Australians being forced to completely use up their retirement nest egg to survive the COVID-19 pandemic.
“While the rest of us are working on how to get through this pandemic and protect workers, the Morrison government remains focused on their own pet political issues,” ACTU president Michele O’Neil said.
“People shouldn’t have to choose between owning a home and a dignified retirement, but that’s exactly what the Morrison government wants.”
The union pointed to upward pressure on house prices and devastating consequences for Australian workers when they retire, with the asset costing them more in the meantime.
“This idea also makes no sense; it will simply increase house prices and decrease the amount that superannuation funds have to invest in housing and other infrastructure projects,” Ms O’Neil said.
“Without a decent superannuation system, we’ll go back to a world where most people retire on a pension that barely puts food on the table.”
The ACTU explained that a 20-year-old worker who accesses the full $20,000 could lose more than $90,000 from their retirement balance, while a 30-year-old could lose about $80,000 when they hit retirement, and a 40-year-old could lose more than $54,000.
“Under the cover of COVID-19, the government has already ripped $42 billion from Australian’s super accounts, and this will cost working families hundreds of thousands at retirement time,” Ms O’Neil said.
The ACTU accused the Morrison government of pursuing a political agenda against superannuation instead of supporting workers through a difficult economic period.
“Superannuation must be protected to provide Australian workers with a dignified retirement. It must not be used as a Liberal Party piggy bank to be dipped into whenever the government decides,” Ms O’Neil concluded.
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