Some will use this as a leg up to get into the housing market. Others will use this as a jumping-off point to add another $250,000 to their property purchase. Others will divert funds already saved for housing to other expenditures.
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Deloitte found that a 30-year-old couple partaking in this policy is expected to receive $3,270 more a year from the aged pension, resulting in a $88,400 lifetime hit to the budget (withdrawing $35,000 each).
Morningstar models show that a couple retiring at 65 would have $635,800 less in super with each utilising the full $50,000 withdrawal. The topper – with no real improvement to housing affordability for first home buyers.
I recently purchased my first home with my husband. Although we had no help from the bank of Mum and Dad, there are caveats to this. We are a dual-income household on good salaries. We have no dependents or caring responsibilities. Our student loans were paid off. We were able to opt for Land Tax instead of Stamp Duty. Purchasing a home these days in Australia requires all the stars to perfectly align.
I could have accessed super through First Home Super Savers Scheme (FHSSS). I chose not to because my super is invested in the same way as most Australians, including those in the MySuper option.
It is tilted towards long-term assets that exchange higher short-term price fluctuations for higher long-term returns. I knew if I relied on super and the market dropped the money may not be there when I found a home. Even if my super could cover the withdrawal, I could have been selling at depressed prices which would further hurt my retirement outcomes.
Superannuation’s purpose is clear. It is to provide for retirement. If we allow it to be pillaged for home ownership, why not support withdrawals for other purposes to build financial security? Pay off student loans, personal loans or credit card debts. Chuck it in the offset. Superannuation either needs to be safeguarded or it might as well be made voluntary.
This is not the first and no doubt this will not be the last policy that proposes accessing superannuation for purposes other than retirement. It is always done under the guise of empowering Australians. In my opinion there is no better way to empower Australians than ensuring a secure retirement.
Perhaps a larger question to consider is the purpose of housing. Is the purpose to provide financial security by allowing people to pay off a mortgage by the time they retire? Is it to strengthen attachment to a community? To provide stability for a family?
Or is it a way to build wealth for home owners and leave the next generation in the dust? If it is the latter, then this is a policy worth considering. If it is the former, this does nothing to help.
Shani Jayamanne is a senior investment specialist at Morningstar.
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