Superannuation should be mainly focused on delivering retirement incomes, according to BT General Manager of Superannuation, Melinda Howes.
In her address at the Self-Managed Superannuation Fund (SMSF) Association conference, Howes reinforced that although there was a place for super funds to meet worthwhile needs, they should be quarantined for longer term savings.
“The system already has in-built provisions for access in special circumstances including for compassionate grounds and hardship, and these are assessed on a case by case basis. But calls to use super which go beyond this, which are for discretionary uses, will only muddy the waters and confuse super’s core purpose,” she said.
Howes noted that health and aged care costs in retirement can be costly, and advised members to seek advice early so these expected costs can be factored into retirement outcomes.
She added that Australians enjoy one of the longest life expectancies in the world, if the gates to access super are opened for other matters, it could leave Australians worse off in the longer term.
“Living longer presents both a blessing, but potentially also a problem. We could live up to twice as long in retirement as we expect.”
“To adequately fund retirement we know that we need super contributions at 12 per cent not the current 9.5 per cent,” she said.
Howes said if Australians want to expand the purpose of super, the question then becomes: how much extra are Australians willing to contribute above 12 percent to fund the new purpose?