A new radical proposal has been presented to the federal government which may see older Australians using their superannuation for aged care expenses or potentially face an inheritance tax on their estate.
During the national summit of the Aged and Community Care Providers Association (ACCPA) on Thursday, August 3, an issues paper was released that explored alternative solutions to address the funding challenges in the aged care sector.
The paper suggests that super savings should be designated solely for aged care expenses and be withdrawn as a lump sum to cover residential accommodation costs.
“The superannuation system is designed to provide an income during retirement, enabling people to remain financially independent as they age. We want to see a system that encourages use of superannuation as it was intended,” ACCPA chief executive officer Tom Symondson said.
The paper also recommends an inheritance tax be put on deceased estate for “superannuation if it is not used for retirement as intended.”
Sharing the sentiment is Assistant Treasurer Stephen Jones, who said the country’s super scheme was designed with the purpose of funding retirement, not serving as a means for passing on an inheritance.
“It strikes me as odd in a system which is about retirement income that a third of the cheques written by superannuation fund, by value, are bequests,” he told ABC News Breakfast.
“It’s not the purpose of superannuation to have a tax preferred, state planning mechanism. It’s for providing for people in their retirement.
“We’ve got a crisis of funding in aged care. At the same time, we have one third of the value of funds being written out in requests. That doesn’t square. It’s a conversation that we need to have.”
The papers come after distressing revelations of elderly neglect during the 2021 aged care royal commission, exposing systemic issues, primarily focusing on inadequate funding.
Earlier this July, Aged Care Minister Anika Wells announced that an aged care task force comprised of experts and professionals had been set up to help improve the standards of care and decide how to best fund aged care.
In an effort to address the growing number of those who will be relying on aged care in the future and the problems plaguing the system now, the task force will examine the current funding structures in aged care and establish a comprehensive system that ensures fairness and equality for all Australians.
The funding for the sector is projected to increase substantially to nearly $40 billion by the fiscal year 2026-27, including an additional $11.3 billion to support a 15 per cent pay rise for the aged care sector over the next four years.