AIST urges against using super for house buying
First-time home buyers should not allowed to dip into their superannuation to fund the purchase of a house, Australian Institute of Superannuation Trustees, chief executive, Tom Garcia believes.
Garcia, urged those involved in the Financial System Inquiry to call for bipartisan support to enshrine the key objectives of superannuation in its final report.
"The purpose of superannuation is to enable all Australians to have enough money for a dignified retirement," he said.
"It is a key plank of the nation's retirement incomes policy and should never be used for any other purpose than helping people save for their retirement.
"Even when the superannuation contribution rate eventually reaches 12 per cent, most young Australians will need every cent of their superannuation to achieve adequate levels of income in retirement."
Garcia warned that enabling people to dipping into their super savings to buy a property could negatively impact their retirements and increase reliance on the Age Pension.
"Removing even relatively small amounts of savings from the superannuation system would see many more Australians reliant on the Age Pension and significantly worse off in retirement," Garcia said.
"Critically, they would miss out on the benefits of compounding interest and portfolio diversification."
AUTHOR
Nicholas O'Donoghue
Nicholas is a journalist for Money Management and Super Review. Nicholas has several years experience as a journalist, reporting and managing websites for various news publications covering the medical and pharmaceuticals sector.
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