The Government backbenchers who have been agitating for a change in superannuation policy to allow people to tap their superannuation for a first home deposit have run into an unequivocal “no” from one of Australia’s largest corporate financial services players – Colonial First State (CFS).
Answering a written question on notice from one of the loudest proponents of superannuation for home loans, House of Representatives Economics Committee chairman, Tim Wilson, CFS made clear it was firmly against such a move.
“From a public policy perspective, CFS does not support a superannuation early release mechanism which permits fund members to withdraw money to fund a deposit to buy their first home,” CFS said in its formal answer to Wilson.
“We are concerned this is not aligned to the sole purpose test, which is primarily to fund income in retirement,” it said.
The big platforms and superannuation provider also suggested that such a policy strategy was flawed, in any case.
“There is also a concern that such a strategy could be ineffective. That is, it may exacerbate affordability issues by fuelling demand for existing housing stock and therefore increasing prices,” CFS said.
It said that from a superannuation preservation perspective CFS left it to super fund members to determine how they used their funds.
“Retirees were assumed to have met a condition of release (for example – retirement following preservation age or age 65). Once a release condition is met and a member gains access to their funds it is up to the member as to how to use those funds in meeting their retirement lifestyle needs,” the CFS answer said.
Comments
Unfortunately, taking this logic, you would do away with transition to retirement pensions, which permits this very act. Given members who share ownership in a house can contribute up to $600,000 of their house proceeds (proposed from age 60) into super, what's the problem? The quicker the members pay off their home mortgage, the quicker they can boost their super contributions voluntarily.
'The act' this article is talking about it withdrawing funds to purchase a first home... how does a TTR pension permit this?
It's also not about paying down an existing mortgage like you imply. It is about using super to fund a deposit which would probably just push house prices up. The pollies only seem interesting in increasing the demand side so that house prices continue to rise... no one wants to fix the supply side so that more houses are available for young people to buy.
Nor does anyone want to fix the problem of demand for financial concessions and incentives associated with housing. They are the real underlying cause of inflated house prices. When average rental yields are below 3%, that's a sign there is no accommodation shortage, just excessive purchase prices.
Negative gearing, unlimited CGT exemptions, unlimited means test exemptions, and first home buyer schemes, all push house prices up unnecessarily. Capping or scrapping these is the way back to housing affordability. Throwing more money at home buyers just pushes up prices. It's like banana republic economies printing more money. It only leads to more inflation.
NZ has recently shown the way in reining in housing related financial incentives and concessions. Australia should follow their sensible lead.
Yes... another government strategy bound for flop...
If all the young people can access Super for a home deposit, more people are in the market and prices once again go up.
We've seen this happen constantly for the last 60 odd years... 1960's: Women began to work, two incomes increases affordability, prices go up. 1970's and '80s: negative gearing of investment properties, more people can afford, prices go up. 2000's: families join together to help children afford a home, more people in the market, prices go up.
Surely there's a limit?
No conflicts in that comment hey CFS.
Not saying I agree or disagree but why would Pollies bother asking Super Fund providers if they wanted to significantly reduce their business ?
What a useless Canberra bubble circus.
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