Super access bad for all

THE LNP’S proposal to give first homebuyers early access to their superannuation could wipe tens of thousands of dollars from every worker’s retirement savings, even if they don’t access the scheme, according to Industry Super Australia.

In a last-ditch push to win over younger voters, Scott Morrison this week declared a re-elected Coalition government would allow homebuyers to siphon up to $50,000 from their super to buy a property.

But analysis from ISA, whose members include some of the nation’s largest super funds such as Australiansuper, Hostplus and Cbus, shows funds would face increased liquidity requirements due to the scheme, forcing them to keep more cash on hand and reducing their exposure to long-term growth-oriented assets.

ISA modelling shows these liquidity requirements will slash returns across investment portfolios by between 10 and 20 basis points each year, depending on the demographics of the fund and existing asset allocations.

A 30-year-old on the median wage with a $20,000 starting balance could be between $14,700-$29,100 worse off at retirement in today’s dollar’s, even if they don’t access the scheme.

ISA chief executive Bernie Dean warned the move to bust open super would hurt both long-term savers and those hoping to buy their first home.

“Not only will throwing super into the housing market jack up prices and make houses less affordable, all Australian workers will be worse off because of lower investment returns,” Mr Dean said.

“Super is meant to be for people’s retirement, not supercharging house prices and pushing the home ownership dream further away.”

Under the proposed policy, Australians would be able to tap 40 per cent of superannuation savings to buy a home, up to a maximum cap of $50,000.

Homeowners would be required to return the cash to the super fund along with a share of the capital gains if they sold the property.

ISA pointed to the Kiwisaver scheme in New Zealand, which has allowed workers to access nearly all of their retirement account funds for a first home deposit since 2007, as proof early access is detrimental to long-term returns.

“Kiwisaver balanced option returns delivered around 1 per cent per annum less than Australian balanced Mysuper products over 5 and 10 years and held around 13.5 per cent less in growth assets than Australian counterparts.

“For a 30-year-old on about $60,000 wages with a $20,000 starting balance that mean $131,600 less at ment,” ISA warned.

Earlier analysis by the ISA showed funds could be hit with $8bn to $10bn in withdrawals each year if the Morrison government is returned to power and implements the scheme.

Allowing couples to take just $40,000 from their super would also send property prices skyrocketing in all state capitals, with the impact most severe in Sydney where the median property price could lift a staggering $134,000, the lobby group warned. could retire