The Government backbenchers who have been agitating for a change in superannuation policy to allow people to tap their superannuation for a first home deposit have run into an unequivocal “no” from one of Australia’s largest corporate financial services players – Colonial First State (CFS).
Answering a written question on notice from one of the loudest proponents of superannuation for home loans, House of Representatives Economics Committee chairman, Tim Wilson, CFS made clear it was firmly against such a move.
“From a public policy perspective, CFS does not support a superannuation early release mechanism which permits fund members to withdraw money to fund a deposit to buy their first home,” CFS said in its formal answer to Wilson.
“We are concerned this is not aligned to the sole purpose test, which is primarily to fund income in retirement,” it said.
The big platforms and superannuation provider also suggested that such a policy strategy was flawed, in any case.
“There is also a concern that such a strategy could be ineffective. That is, it may exacerbate affordability issues by fuelling demand for existing housing stock and therefore increasing prices,” CFS said.
It said that from a superannuation preservation perspective CFS left it to super fund members to determine how they used their funds.
“Retirees were assumed to have met a condition of release (for example – retirement following preservation age or age 65). Once a release condition is met and a member gains access to their funds it is up to the member as to how to use those funds in meeting their retirement lifestyle needs,” the CFS answer said.