First home saver scheme still need questions answered
A key question surrounding the first home superannuation saver scheme is how superannuation funds will honour the deemed earnings, according to HLB Mann Judd Sydney.
The firm’s wealth management manager, Lindzi Caputo, said investment earnings could not be guaranteed, and wondered how the deemed earnings would be funded in years when the fund did not generate returns above the rate used.
Caputo said this was one of the key questions surrounding the scheme that still needed to be answered.
“Another question is how quickly super funds will be able to release the money for practical purposes. With a house auction, funds for the deposit are required on the same day as the offer while for a sales process the exchange cannot occur until the deposit is received,” she said.
“Another concern is how this scheme will operate for couples where one partner is a first home buyer and the other is not.”
Caputo noted that the reality was that the amount that could be saved through the scheme alone would not accumulate enough for most home deposits in major cities.
“It is likely that people will need a multi-strategy approach and should consider employing other savings strategies in conjunction with the scheme to accumulate a meaningful deposit,” Caputo said.
She said a person with a salary of $70,000 who set up a salary sacrifice arrangement super from a pre-tax income of $10,000 a year over three years under the scheme would have $25,892 available to purchase a first home after three years.
This represented a five per cent deposit on a property worth $500,000, and even with a partner with the same strategy, they would still only have a 10 per cent deposit.
“While this is a good result, it is unlikely to meet the minimum deposit requirement and is also short of most bank lending ratios, so further funds from outside of the scheme would be required for the deposit,” she 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.
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