To criticise the First Home Super Savers Scheme would be to support the status quo of wholesale consumer disengagement, according to the Financial Services Council (FSC).
The FSC’s chief executive, Sally Loane, said in an address to Super Review’s Future of Super conference on Thursday that the Government’s initiative would prompt engagement and in turn would lead to people merging multiple superannuation accounts, consider their insurance cover, and review their investment options.
“To criticise the policy – as a few have – as contrary to the sole purpose test or the thin end of the wedge to allowing wholesale raids of super for housing, is to support the status quo, wholesale consumer disengagement,” Loane said.
Loane said the boost to their capital that they receive saving for a deposit through their super fund would teach first home savers that super was the best place for their savings over the long-term.
“This will surely prompt salary sacrifice contributions above the levels we see today,” she said.
“Initiatives like the Budget’s First Home Super Savers Scheme that promote engagement and choice, will surely result in more innovative products with lower fees.”
While Loane said the FSC supported the Government’s efforts to remove barriers to downsizing for older Australians, she said the policy did not exempt the sum from the pension asset test so it remained to be seen how much take-up there would be.
The initiative allows Australians to contribute gains of up to $300,000 from the sale of their home to super, without breaching super caps.
“It could also ease the supply problem in urban areas, freeing up larger homes for younger, growing families,” she said.