Superannuation funds will be forced to carry more cash and be less able to invest for the long-term if the Coalition’s proposed ‘super for housing’ scheme goes ahead.
The proposal, announced at the weekend, would see first-home buyers able to withdraw up to $50,000 from their super to put towards a house deposit.
However, there are fears this will impede the ability of funds to manage for the long term if they have to accommodate regular $50,000 withdrawals.
Speaking to Super Review, Industry Super Australia (ISA) said the proposal did not align with the original intention of super and would “torpedo super fund investment returns for all Australians” by forcing funds to carry more cash and be less able to invest for the long term.
ISA CEO, Bernie Dean, stated it would “lock young people into hugely-inflated mortgages” and “would be like throwing petrol on a bonfire”.
“We need sensible solutions to address house prices – like boosting the supply of affordable housing which will bring prices down and get young people into a home without lumbering workers with higher taxes in the future.”
According to ISA, any additional money Australians could take out of super via the scheme would almost immediately be gobbled up through housing price surges. Its analysis showed it could hike the nation’s five major capital city median property prices by between 8%-16%, most staggering in Sydney, lifting the median property price by $134,000.
Meanwhile, Future Super chief executive, Simon Sheikh, said allowing first-time homeowners to withdraw their super represented a short-term fix that would create generational inequality.
With 70% of its members under 34, the highest proportion of young people in any fund, Future Super could be the most disadvantaged by the policy.
Sheikh said: “This short-term thinking isn’t protecting people’s future in the long term. It is our job to protect our members' retirement savings no matter the government policy”.
The central bank has announced its latest rate decision amid stubborn inflation and increasing geopolitical tension.
Aware Super has outlined its systematic approach to corporate engagement as institutional investors increasingly assert their influence on company boards and take on an active stewardship role.
The country’s second-largest super fund has completed its fourth SFT this past financial year and welcomes almost 5,000 new members.
The corporate fund has announced it is seeking a suitable merger partner as the number of corporate super funds in Australia continues to dwindle.
Personally I'm not in favor of this legislation but not for the reasons of the alarmist media reports. Seriously ISA saying that 8 to 16% increase in house prices?
Not sure on what analysis, but I cannot see how a small number of house buyers who have extra cash are going to make any dent in the "overall" market. A lot of first home buyers would be lucky to have 50k in their super accounts let alone 40% of their total.
And even if it were so, it would be at the lower end of the market (likely units, certainly not properties above the median house price.
I understand a reaction to protect stakeholders, but don't be over the top.
Add new comment