First Home Saver Plan Thin End of the Wedge for Super Savings

MELBOURNE, Australia, May 11 -- Industry Super Australia issued the following news release:

Industry Super Australia expressed serious concern over the government's proposal to allow younger Australians to save for a housing deposit through their super fund.

"The proposal is deeply flawed and the thin end of the wedge for super savings - threatening workers' future retirement", said chief executive David Whiteley.

"The plan is contrary to the sole purpose test for superannuation by allowing withdrawals from super other than retirement".

"If implemented, the policy is likely to be expensive to administer and will impact the ability of fund trustees to invest contributions over the long term".

"Funds will need to maintain more liquid asset allocations to deal with unpredictable withdrawals".

"There is merit in assisting first home buyers, but this is not the way," he said.

Whiteley welcomed the establishment of a new Housing Finance and Investment Corporation and tax incentives to drive funding for low-cost housing projects.

But he questioned the initiative that would allow downsizers aged 65-plus to put $300,000 from the sale of their family home into super.

"Older Australians are unlikely to take this up in great measure as the proceeds will be counted in the pension assets test," he said.

Whiteley identified the merging of the Superannuation Complaints Tribunal with the Financial Ombudsman Service and the Credit and Investment Ombudsman into a single Financial Complaints Authority as a concern.

"Superannuation is highly complex, not just another financial product to be lumped in with credit cards and mortgages. This new body will be overseen by ASIC with significantly less funding than the current Tribunal which today struggles to properly service consumers," he said.

New infrastructure spending while welcome has not quite lived up to pre-budget hype.

"Industry super funds are great proponents of long term, nation-building projects to create jobs, boost economic growth and provide strong member returns".

"Industry super funds look forward to working with the Government to explore opportunities for future investment", he said.