Insurance group Tower Australia has this week restarted the debate over allowing people to use their superannuation to help fund mortgages – but this time in the form of a mortgage interest relief scheme.
In a submission to the Parliamentary inquiry into improving the superannuation savings of people under 40, Tower’s Chief executive officer, investments, Grahame Evans said a mortgage interest relief scheme would encourage those under 40 to save more for their retirement through superannuation.
He said people under 40 were often heavily financially committed and therefore some form of tax-mortgage benefit provided the best opportunity to encourage saving.
“The scheme would be relatively simple in that a person who contributes to superannuation above the employer 9 per cent would be able to claim a small amount of mortgage interest back on their tax,” Evans said.
“For people under 40, meeting the mortgage and other living costs, is a priority ahead of saving for a retirement which may be over 25 years’ away,” he said. “Our proposal covers both those issues allowing people to pay off the home and save for retirement enhanced through a larger investment than would normally be the case.”
Evans said that the scheme need not cost the Government a large amount in tax revenue given that increased superannuation savings generated added contributions tax income and superannuation investment earnings income.
“The long-term benefit to the Government of having a significantly larger part of the population as self-funded retirees would be great,” he said.
