Homeownership vs. retirement savings: Debate over superannuation access heats up
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The Australian dream of owning a home has become increasingly elusive for many, particularly as the housing market soars and the cost of living bites harder into our budgets.
However, a radical proposal from Liberal Senator Andrew Bragg could change the game for countless Australians struggling with mortgage repayments.
The suggestion? Allow Aussies to withdraw their entire superannuation balance to pay off their mortgage.
This bold idea is a response to the current housing affordability crisis and the rising cost of living, which is leaving many Australians feeling the pinch.
The Coalition had previously campaigned to allow first-time homebuyers to withdraw up to $50,000 from their super for a mortgage deposit.
However, Senator Bragg is pushing the envelope further, proposing that Australians be allowed to use their entire super balance to achieve the dream of home ownership sooner.
The proposal comes as the average borrower has been shelling out an additional $19,000 annually on their mortgage since the Labor government took office in May 2022.
‘There are many Australians who have a decent-sized super balance that they would like to offset on their mortgage which would reduce their interest payments and get them closer to home ownership,’ Senator Bragg explained.
‘There's a range of ways this could be achieved from full withdrawal through to being held in a legislated offset account.’
‘One of the things that worries me is you've got people forced to pay high fees to their super fund and simultaneously pay high interest to a bank.'
Those in arrears or default have limited options, as current severe hardship rules restrict immediate access to superannuation funds.
Senator Bragg, the Opposition's home ownership spokesman, believes that the key to a successful retirement is not necessarily the size of one's superannuation balance but instead their home ownership status.
‘It's a highly rigid system. I just don't buy this idea that we have to force everyone into a straitjacket,’ he continued.
‘If the Bank of Mum and Dad is now going to be determining housing outcomes, we're in very dangerous territory.’
‘Increasingly, we're seeing housing outcomes dictated by parental wealth, and that's very bad. I'd say that's very un-Australian.’
‘Where super comes in, absent the Bank of Mum and Dad, this is likely to be people's biggest source of capital.'
He cited the example of a homeowner in their 40s with an average mortgage of $600,000, suggesting that using $200,000 from super to offset the loan could significantly reduce interest payments and fast-track the journey to outright home ownership.
The Senate Economics Committee is currently exploring this idea, with a report from the 'Improving consumer experiences, choice, and outcomes in Australia’s retirement system' inquiry expected soon.
An interim report has already floated the concept of a mortgage offset account linked to super, allowing borrowers to use their retirement savings for monthly repayments, thereby preserving their bank savings.
While the idea may seem attractive, especially to those feeling the squeeze of high mortgage repayments, it has its critics.
Labour has opposed early super access, arguing that it could deplete retirement savings and increase elderly dependence on the age pension.
The Reserve Bank's series of interest rate rises have only added to the urgency of finding a solution, with monthly mortgage repayments on an average of $600,000 loan jumping by 68 per cent.
The debate is set against the backdrop of a growing superannuation sector valued at $3.5 trillion, which the current government argues is essential for ensuring a dignified retirement.
Treasurer Jim Chalmers has expressed concerns that early access to super could harm long-term retirement savings.
‘The last decade saw the former government raid the superannuation system for its own purposes with a devastating impact on the savings of millions of Australians,' he said.
'Legislating an objective of super will help prevent this happening again.'
Senator Bragg, however, counters that the Labor government's ties to union-dominated industry super funds may be influencing their stance against exploring early super access.
'Labor doesn't care about the workers. What they care about are the donations they receive from unions and the super funds,' he replied.
‘The idea that super makes a massive difference to pension is false,’
‘For younger people who want individual agency, this is a practical policy,’
‘It's also a policy that helps protect the Budget over the longer term.’
In related news, a woman explained how Australians can receive a government contribution of up to $500 for their superannuation by making a personal after-tax contribution of $1,000.
The Super Co-contribution Scheme provides 50 cents for every dollar contributed, up to a maximum of $500, specifically for low—and middle-income earners. More information is available here.
What do you think about using your super to pay off your mortgage? Is home ownership the ultimate retirement security, or should super be preserved for later years? Share your thoughts and experiences in the comments below.
However, a radical proposal from Liberal Senator Andrew Bragg could change the game for countless Australians struggling with mortgage repayments.
The suggestion? Allow Aussies to withdraw their entire superannuation balance to pay off their mortgage.
This bold idea is a response to the current housing affordability crisis and the rising cost of living, which is leaving many Australians feeling the pinch.
The Coalition had previously campaigned to allow first-time homebuyers to withdraw up to $50,000 from their super for a mortgage deposit.
However, Senator Bragg is pushing the envelope further, proposing that Australians be allowed to use their entire super balance to achieve the dream of home ownership sooner.
Senator Bragg proposes using superannuation to pay off mortgages. Credit: Shutterstock
The proposal comes as the average borrower has been shelling out an additional $19,000 annually on their mortgage since the Labor government took office in May 2022.
‘There are many Australians who have a decent-sized super balance that they would like to offset on their mortgage which would reduce their interest payments and get them closer to home ownership,’ Senator Bragg explained.
‘There's a range of ways this could be achieved from full withdrawal through to being held in a legislated offset account.’
‘One of the things that worries me is you've got people forced to pay high fees to their super fund and simultaneously pay high interest to a bank.'
Those in arrears or default have limited options, as current severe hardship rules restrict immediate access to superannuation funds.
Senator Bragg, the Opposition's home ownership spokesman, believes that the key to a successful retirement is not necessarily the size of one's superannuation balance but instead their home ownership status.
‘It's a highly rigid system. I just don't buy this idea that we have to force everyone into a straitjacket,’ he continued.
‘If the Bank of Mum and Dad is now going to be determining housing outcomes, we're in very dangerous territory.’
‘Increasingly, we're seeing housing outcomes dictated by parental wealth, and that's very bad. I'd say that's very un-Australian.’
‘Where super comes in, absent the Bank of Mum and Dad, this is likely to be people's biggest source of capital.'
He cited the example of a homeowner in their 40s with an average mortgage of $600,000, suggesting that using $200,000 from super to offset the loan could significantly reduce interest payments and fast-track the journey to outright home ownership.
The Senate Economics Committee is currently exploring this idea, with a report from the 'Improving consumer experiences, choice, and outcomes in Australia’s retirement system' inquiry expected soon.
An interim report has already floated the concept of a mortgage offset account linked to super, allowing borrowers to use their retirement savings for monthly repayments, thereby preserving their bank savings.
While the idea may seem attractive, especially to those feeling the squeeze of high mortgage repayments, it has its critics.
Labour has opposed early super access, arguing that it could deplete retirement savings and increase elderly dependence on the age pension.
The Reserve Bank's series of interest rate rises have only added to the urgency of finding a solution, with monthly mortgage repayments on an average of $600,000 loan jumping by 68 per cent.
The debate is set against the backdrop of a growing superannuation sector valued at $3.5 trillion, which the current government argues is essential for ensuring a dignified retirement.
Treasurer Jim Chalmers has expressed concerns that early access to super could harm long-term retirement savings.
‘The last decade saw the former government raid the superannuation system for its own purposes with a devastating impact on the savings of millions of Australians,' he said.
'Legislating an objective of super will help prevent this happening again.'
Senator Bragg, however, counters that the Labor government's ties to union-dominated industry super funds may be influencing their stance against exploring early super access.
'Labor doesn't care about the workers. What they care about are the donations they receive from unions and the super funds,' he replied.
‘The idea that super makes a massive difference to pension is false,’
‘For younger people who want individual agency, this is a practical policy,’
‘It's also a policy that helps protect the Budget over the longer term.’
In related news, a woman explained how Australians can receive a government contribution of up to $500 for their superannuation by making a personal after-tax contribution of $1,000.
The Super Co-contribution Scheme provides 50 cents for every dollar contributed, up to a maximum of $500, specifically for low—and middle-income earners. More information is available here.
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