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.