Allowing early access to superannuation would amount to the “wilful destruction” of Australia’s retirement system, Mr Keating told Fairfax Media.
“The key to wealth accumulation in retirement savings is compound earnings. It is the earnings on the earnings plus new weekly capital commitments that allow superannuation accumulations to roughly double every seven to eight years,” he said.
“Such growth in the asset base could not happen if people were permitted to take funds for convenience, thereby diminishing the asset pool and its capacity to compound.
“This would especially be the case for younger home buyers who would typically have a relatively modest pool of superannuation savings from which to draw.”
As reported earlier this week, the superannuation industry has also hit back at Mr Hockey’s suggestions.
The SMSF Association’s Graeme Colley questioned whether first home buyers would have a substantial enough home deposit in the super fund, while the Association of Superannuation Funds of Australia’s chief executive Pauline Vamos said the move would largely benefit high-income earners.
“Pumping another source of funds into an already overheated property market only benefits those selling properties,” added Quantum Financial principal Tim Mackay.
“How on earth will [the] resulting increased house prices benefit younger people? Politicians sharing their thought bubbles in super does nothing for consumers’ confidence in the super system,” he told SMSF Adviser.
Like Greg , I agree this once with Keating. Super is for building a capital base upon which retirees are (mostly?) self supporting when it comes to income needs post the working life.
Sure needing a home is important & youngsters (my kids included) need help. But accessing super is NOT the way to go. What happens if a child gets a major illness & needs help. That may be even more important to provide help than the home.
Once you start introducing ‘exceptions’ then the law is useless. Just look at ‘normal’ tax law when you allow exceptions.
I agree completely with Paul Keating and I did not vote for him. I disagree with Dr Dwyer. If we have no retirement nest egg, how do we live in retirement? I often see people who have a nice house but rely on the pension to live and then they can’t afford rates etc and health nsurance. Selling the house to get cash does not help in many cases because the house will not realize a significant retirement fund, especially if the retiree wants to reinvest in a cheaper property. The funding of retirement is a real problem getting more serious and must be addressed ASAP.
Well I like Paul Keating but I must demur a little.
I do agree about not throwing fuel on a speculative bonfire – but tell that to the Reserve Bank. Zero interest rates drive infinite land prices!
Current policy ignores life cycle needs – to Australia’s detriment. People will not breed without nests and, if they cannot afford nests, there will not be eager consumers and producers needing to use all those assets we have acquired with our super. What is the point of investing in buildings, plant etc if there is going to be no one around in 40 years to use them or want the products produced from them?
That was why Senator Harradine voted (quite rationally) against the superannuation guarantee levy. He knew from experience, as many of us do, that you cannot save uniformly over a life cycle and many people with children can only start saving for retirement after raising children.
For probably the first time I agree with Ex Prime Minister Paul Keating on the early access to Superannuation Funds for 1st Home Buyers. Young Australians should realise the importance of accumulating to retirement, especially as it is unlikely that future Government will be able to continue to provide & fund Aged Pensions (as they are today) which will leave people reliant on Government Support below the poverty line in years to come. Best you accumulate as much as possible, being prepared to fund your own retirement income, remember “Cents make Dollars” so let you Super Grow.
I heard Joe Hockey on Lateline saying things have changed. Amazingly one change is comments by the Treasurer have become even sillier since the Swan days.
The simple reality is its a supply and demand market (Joe should like this free market concept). Demand comes from first home buyers and investors. Currently investors get a range of tax concessions from Joe, while our state Governments give countering grants to first home buyers. Joe is now proposing further assistance to first home buyers at a cost being future age pensions due to people having less. Surely rather than Governments handing more tax dollars to each group on the supply side of the market a similar change could occur by removing tax concessions. That would assist the government budget (which is in crisis and needs help).
Would someone who access super to buy a home have to wait longer for the age pension, or should they have part of the home an asset for the pension assets test?