First home super saver design should not lead to higher costs

The first home superannuation saver scheme should not involve any significant administration burden on super funds as it would lead to higher costs for all fund members, according to the Association of Superannuation Funds of Australia (ASFA).

The scheme that was announced on Tuesday night as part of the 2017 Federal Budget would allow first home buyers to save for a deposit by salary sacrificing into their super account over and above the super guarantee.

ASFA chief executive, Martin Fahy, said: “ASFA recognises the importance of home ownership as a key pillar for achieving comfort and dignity in retirement, however the design of any new first home saving arrangement should never impose on the primary role of super being saving for retirement”.

However, Fahy noted that it had the potential benefit of encouraging young Australians to engage with their super earlier in life.

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On the Budget addressing housing affordability, Fahy said with the right settings, super funds could support long-term housing affordability improvements through institutional investments.

“Funds may also be attracted to invest in social housing bonds issued via the announced bond aggregator measures,” he said. “A deeper bond market is a good thing in opening up more opportunities for funds to invest.”

Fahy also welcomed the ability for retires to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home from 1 July 2018.

Fahy said the extension of the capital gains tax rollover relief would help support super fund mergers.

“Mergers of funds are one means by which they can realise scale efficiencies, so removing this significant barrier is welcome in a competitive superannuation industry that is continuously improving its efficiency and productivity,” he said.

Responding to the announced single external dispute resolution body, the Australian Financial Complaints Authority (AFCA), Fahy said it was important that it had the necessary statutory powers to deal with super related disputes, particularly in the case of death benefits disputes, where decisions which were binding on all parties affected were needed.

“Superannuation has features that set it apart from other products. There is often great complexity in disputes and many parties may be involved, so it will be crucial to have deep specialist knowledge and expertise in any dispute resolution body,” Fahy said.