Treasurer Joe Hockey seems to have opened up a can of worms with his suggestion that Australians could dip into their super more than once in their lives – specifically to buy their first homes.
For those of us with adult children, they either live with us or they are in their own home, rented or owned. But how would you feel if your child was able to access their superannuation early, knowing full well yourself how crucial super is and how it can be the difference between poverty and actually enjoying your retirement after 65? Would you be OK with them taking out their super at say, 30, and using it to purchase a home? Or would we rather they borrow the money from us?
One thing this suggestion from Mr Hockey has opened up is the question about what exactly superannuation will look like in years to come. For our generation, superannuation wasn’t compulsory until 1991, and the smart were able to save well before then, while some others were left with barely anything at all when they opened the tin in their 60s.
Labor slammed the notion that super could fund the first home for young adults but Mr Hockey said that we need to start thinking seriously about super and how to use it, as the population continues to extend its life expectancy.
“We are prepared to look at a diverse range of proposals to help young Australians buy their first home,” Mr Hockey said. But shadow treasurer Chris Bowen wasn’t having a bar of it and immediately attacked the suggestion and said, “Another day, another Hockey thought bubble on how best to undermine superannuation,” Mr Bowen said.
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This plan could also affect those of us who own a home and wish to downsize if the scheme is popular, as housing prices will rise to keep up with demand.
The shadow treasurer also told ABC Radio that “The objective of the superannuation system should be giving Australians a dignified retirement and, as a result, reducing pressure on the aged pension. That’s the way to make the aged pension more sustainable, not Joe Hockey’s method of simply making people work longer and making the pension less adequate”.
Tony Abbott also weighed in on the topic, telling reporters in Perth this afternoon, “It is something that I am very happy to see further debated but there are obviously some issues around it, and let’s fully consider it”.
He assured the media that his government doesn’t have any plans to introduce it at this stage. But after a week where pensioners and baby boomers have been front and centre in the government’s mind, can we really believe that there won’t be major changes? If not for us, for our children, who in turn look to us for guidance and stability?
And for those of us who have retirement nest eggs and have worked extremely hard for our money, it can seem like backwards thinking to show our children how hard work pays off, only for them to be given an easy way out that could be catastrophic in the long run. Not to mention the temptation to take a lump sum of money that is only ever able to be accessed before 65 (70+ for their generation) in extenuating circumstances – it could be rorted.
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According to the CEO on Industry Super, David Whiteley, “Such proposals (allowing early access to super) are completely at odds with the objective of encouraging Australians to build private savings to take pressure off the aged pension,” Mr Whiteley told Fairfax.
What do you think? Would you advise that your children dip into their super to get a home deposit together or do you think they should save the money themselves? Tell us below.