First home saver only buys you the front door

The first home superannuation saver scheme can only buy you the front door in Sydney, according to a panel.

Speaking at Super Review’s Future of Superannuation Conference on Thursday, NESS Super chief executive, Angie Mastrippolito, told a panel that while the scheme would engage some people, it would not engage the majority of Millennials as it lacked substance.

“I think Millennials are disengaged but they’re not stupid. The reach of getting a home is still completely out of reach,” Mastippolito said.

“When you look at savings per person to the whole system it’s like trying to water the desert with a garden hose. In Sydney that buys you the front door. If the Government is going to go down this path, be big and be bold.”

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She noted that the scheme was badly targeted and complicated.

“It’s also not very targeted because people with salaries over $180,000 are able to access it as well, so it’s incredibly badly targeted and complicated. Make it bold and make it so that it will give someone $50,000 through over 10 years, make it big, bold, and worth it,” she said.

However, Deloitte super partner, Russell Mason disagreed, arguing that while it was not going to have a huge impact it was better than nothing and a step in the right direction.

“It’s a small amount but it’s some incentive for a young person to start saving for their home. It’s money that wouldn’t have gone into the super system otherwise. It’s an incentive and a bit closer to buying their first home and I think that’s great,” Mason said.

For Willis Towers Watson’s head of retirement incomes policy, Nick Callil, the biggest concern was that the Australian Taxation Office (ATO) would be administering the scheme.

“The ATO doesn’t know whether they’re on their fourth home. Anytime someone puts a voluntary contribution in the scheme, then someone at the ATO has to add 90-day bank bill plus three per cent and that’s a big operation,” he said.

Callil noted that while the administration was not on the funds, it would still creep into the costs and complexity of the system.

He was also concerned about how the scheme would work.

“How does it work? You buy a house at auction and you have to come up with the deposit by the following Monday, how does the system work? Do you have to go to the fund and the fund has to check with the ATO, and how do you get that all done by the Monday?” he said.

The scheme would allow first home buyers to save for a deposit by salary sacrificing into their super account over and above the super guarantee with a cap of $30,000.