Give first home buyers access to super – CEDA

housing poverty21 Sept 2015  Laura Millen  Financial Standard

First home buyers should have access to their superannuation funds to purchase owner-occupied housing, the Committee for Economic Development of Australia (CEDA) has said.

CEDA chief executive Professor Stephen Martin said that the measure would help alleviate poverty in retirement.

Speaking ahead of the release of a new report, ‘The super challenge of retirement income policy’, Martin said: “Two key trends, our ageing population and decreasing housing affordability, mean Australia’s retirement system structure needs a significant rethink.”

The report calls for an overhaul of retirement policy and it asks for pre-tax mortgage repayments and superannuation being available for owner-occupied home purchases.

“The impact of sustained housing affordability issues is only just beginning to be recognised as a significant issue for retirement policy,” Martin said.

“However, if it is not addressed the long term consequences could be significant with an increasing number of people living in poverty in retirement and unsustainable fiscal pressure on the Federal Budget.”

A report by CEDA in April found that as many as 1.5 million Australians live in poverty and the elderly, particularly those who do not own their home, are an at-risk group.

“There has been a lot of talk and tweaking of retirement policy aimed at reducing the burden on government, but what Australia needs is a robust discussion on all the options to ensure long term Australians can retire comfortably,” Martin said.

CEDA thinks that taxation arrangements need to be reviewed because the current concessions are benefiting the rich and are being used as tax mitigation measures rather than to encourage retirement savings.

“One option would be make the family home part of the assets test for the Age Pension and change superannuation payments to an after income tax payment, with all other super tax concessions removed.

Alternatively, mortgage payments on the family home could be allowed to be made pre-tax,” Martin proposed.

Original article here

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