Aged care needs to be self-funded through super

The COVID-19 pandemic has made it clear the country needs to spend more on aged care but it must also be supported through self-provision via superannuation which is why the superannuation guarantee (SG) needs to lift to 12%, according to AustralianSuper.

AustralianSuper chair and independent director, Dr Don Russell, said there were already enormous backlogs of care needed within aged care and standards needed to rise along with better facilities and more registered nurses.

“Self-provision for aged care is needed and there is already reform in place to lift the SG to 12% to provide for costs post 60 years old,” he said.

“But we unfortunately seem to be going through an exercise based around the notion that we would be distracted by the current circumstances of the economy to give up what is really quite a remarkable long term structural savings in attempt to deal with the short-term consequences of the COVID-19 induced recession.”

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Russell noted that while the early hardship release of superannuation was centred around an “unusual and remarkable event”, there was a real risk that people would start to view super as an asset for things other than for life after 60.

“There is a risk that people will start to see all sort of other things that this pool of assets can be used to fund other things like housing,” Russell said.

“But then what we’re doing is changing the nature of super, turning it from a long-term savings vehicle to something like a piggy bank. What we mustn’t lose track of is that it is a long-term savings vehicle that is tax preferred.

“We can’t just use it as a pool of tax-preferred money to support every worthy cause that people can think of.”