Allowing first home buyers to access their superannuation funds for house deposits could lead to financial stress in retirement, warns The Australian Institute of Superannuation Trustees (AIST).
AIST CEO, Tom Garcia says the solution to housing affordability doesn’t come from our superannuation funds.
“[Superannuation] is a key plank of the nation’s retirement incomes policy and should never be used for any other purpose than helping people save for their retirement… Removing even relatively small amounts of savings from the superannuation system would see many more Australians reliant on the Age Pension and significantly worse off in retirement,” Garcia said.
Placing more reliance on the Aged Pension could be problematic, considering pensions formed a part of the budget cuts announced by the Abbott Government. The 2014-15 Budget will see pensions indexed to inflation from September 2017 – in a bid to make these payments more sustainable to meet the demand of Australia's ageing population. It is currently indexed in line with the higher of the increases in the CPI, Male Total Average Weekly Earnings or the Pensioner and Beneficiary Living Cost Index.
Superannuation is often not even enough as is, according to Garcia.
“Even when the superannuation contribution rate eventually reaches 12%, most young Australians will need every cent of their superannuation to achieve adequate levels of income in retirement," he said.