ASFA wary of using super for home deposits

First home buyers should think twice before accessing their superannuation to pay for home deposits, according to a super body.

The Association of Superannuation Funds of Australia (ASFA) warned accessing super for a first home deposit could lead to poorer retirement outcomes.

It said the current compulsory super contribution rate of 9.5 per cent and the eventual rate of 12 per cent is not enough to fund a home deposit and a comfortable retirement.

"If housing affordability was connected to the super system, the current contribution rate of 9.5 per cent would need to be increased to cover the retirement savings shortfall," ASFA said.

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ASFA is also worried using super for a home deposit could lead to an inequitable super system, where those on higher incomes can replace any amount taken out for a deposit through salary sacrifice and get a tax concession.

"These tax concessions would not deliver any lower Age Pension expenditure in the future, as the contributions would merely replenish the savings forgone and not boost super balances further."

Furthermore, ASFA believes housing affordability should not be linked to retirement income policy.

"Policies that merely increase the capacity of individuals to pay for housing often have the effect of driving up housing prices, eroding any positive impact on housing affordability," it said.