Allowing retirement savings to be drained for housing deposits could drive up already exorbitant prices in Australia’s housing market further, Challenger’s chair and a Cbus executive have warned.
As argued by Mr Wilson, among others, home ownership is the most important aspect to preparing for retirement – with it being one of the largest determinants of poverty in retirement.
But Challenger chair Jeremy Cooper has criticised the idea, saying policies around superannuation and housing should not be conflated.
“There’s a saying that there’s no public policy problem for which the superannuation system hasn’t been singled out as the solution,” Mr Cooper commented during a retirement income panel hosted by the Association for Superannuation Funds of Australia (ASFA).
“I’m dead against just conflating various public policy issues as I alluded to. As we’ve seen, the superannuation system can’t really cure the gender gap because it’s employment-related and I don’t think it can solve the housing affordability problem either.”
Housing affordability is not an issue about money, rather, it is about supply, both Mr Cooper and Robbie Campo, Cbus group executive for brand, advocacy and product agreed.
In fact, allowing early access to super for housing deposits could have a detrimental effect on housing affordability.
“You just give the housing market more access to finance and you drive up prices, it’s as simple as that,” Mr Cooper said.
“Taking money out of super and putting it into a system where there is insufficient supply is just going to ramp up the cost for that,” Ms Campo added.
An alternative solution could be to address the stamp duty tax, a measure that dates back to 1865.
The NSW government is currently considering reforms which would give people the option to choose between the current system of paying stamp duty when buying a house, or instead paying an annual property tax for as long as they own the house.
“It’s a massive barrier to young people getting into the property market,” Mr Cooper said.
“It’s far more sensible to look at barriers like that, than loading up the pension system with things that it wasn’t designed to do.”
The recently released Retirement Income Review has placed an emphasis on home ownership and more efficient spending of retirement savings, over raising the current compulsory contributions rate to 12 per cent.
Ms Campo noted that the Retirement Income Review had also not addressed the impacts of the government’s early super release measure in detail, perhaps a result of “awkward timing”, as the panel was winding up their work while the scheme was occurring.
“I do think with $35 billion having come out of the system, it is likely to have a more significant impact, particularly at the lower end, and those factors are not factored into the report,” she said.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].