First home super scheme can engage millennials
Financial planners should view the first home super saver scheme proposed in the 2017 Federal Budget as an opportunity to engage with millennial clients, or the millennial children of their current clients, according to Colonial First State (CFS).
In its 2017 Adviser Briefing held yesterday, executive manager technical services, Craig Day said this measure by the Federal Government to link the issue of housing affordability with superannuation was a powerful tool.
“The interesting thing about this is not whether it allows people to buy houses or not. I think that’s kind of in the periphery,” Day said.
“What it does is it actually engages millennials with their superannuation with a very powerful thing of housing. The concept of linking housing with their first home changes them and people get interested [in their super].”
While advisers may dismiss the opportunity for them through this policy because they did not serve millennial clients should remember that they could service the millennial children of their current clients.
“How do you now engage them in your advice process? You might do it free of charge,” Day said.
It would otherwise be business-as-usual for advisers because they would not be dealing with a different type of contribution under the policy.
Rather they would still be dealing with concessional and non-concessional contributions which must remain within normal caps to the extent that the member can contribute excess of their compulsory superannuation guarantee requirement, which would count towards the amount that can be released.
“They’re just essentially saying you’ll be able to get your contributions plus the deemed rate of return back out of the fund – and that will be the shortfall interest rate, currently at 4.78 per cent,” Day said.
The government had not imposed a time limit on when members could withdraw money to buy their first home so the $30,000 maximum amount would compound every year at 4.78 per cent.
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