FSC declares opposition to using super for housing

The Financial Services Council (FSC) has distanced itself from suggestions that people should be able use their superannuation balances for a first home deposit.

In a column to be published in the upcoming print edition of Super Review’s sister publication Money Management, the FSC’s senior policy manager for superannuation, Jane Macnamara, said that when the proposals being put forward were closely examined they simply did not “stack up” and ran the risk of artificially inflating house prices.

The FSC’s position will come as a blow to one of the promoters of the superannuation for housing proposal, former FSC policy adviser and now NSW Liberal Senator, Andrew Bragg, who has pushed hard for the proposition.

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Macnamara’s column, expressing the formal view of the FSC, said that while, at first blush, the superannuation for housing proposal looked attractive there was a “mountain of research demonstrating that giving first home buyers more money simply increases house prices”.

“We’ve seen this in action with first home buyers’ grants. So, topping up your deposit out of super savings is going to put you… more or less back where you started, only with a bigger loan that takes longer to pay off. And a lower super balance,” she wrote.

“Accessing your super is also not necessarily going to make it easier to get a home loan. Using money you’ve been forced to save doesn’t make you a better risk for a bank to take on, and it doesn’t show that you can make repayments, so your income and savings behaviour will still be a key factor in whether you can afford to buy,” Macnamara’s column said.

“At the end of the day, this is just another attempt to use the superannuation system to solve an unrelated problem. Australia has some of the least affordable property markets in the world, and it is not the role of the superannuation system to fix that,” she wrote.

“Changing the long-term promise of superannuation by allowing savings to be withdrawn almost as they are accumulated would undermine the purpose and the promise of the system. Not only would it set up the super system to fail, but it would also undermine retirement savings for Australian workers.”


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I am not convinced by this from Jane and the FSC at all. The super system needs to be more flexible to support a decent level of retirement for people. How many people retire without owning a property and have a rent liability- surely some flexibility to structure your own retirement should be looked at. Adding a lever gives people some options. The constant pushback from industry on some of these reforms are just sounding protective of a system that needs to better serve the consumer. With good advice and guidance, someone could make an informed decision on property vs amassing super. Sounds sensible to me.

The ability to use previously accumulated superannuation towards a deposit for first home buyers does not inflate the vendor selling price. However, free first home buyer grants, welfare rental assistance dollars, not making the domestic home an assessable asset for qualification of the Age Pension leads to personal savings of surplus dollars being used to over capitalise the domestic home thereby increasing the sale value and/or inheritance thereof. Also it leads to an increased welfare dollar provided Age Pension and should emergency additional funds eventually be required a reverse mortgage could be considered. If Superannuation is truly to be used in Retirement then the illogical favoured treatment of domestic property needs to be removed along with the welfare rental assistance.

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