ASFA hits back at CPA findings

29 August 2013
| By Staff |
image
image
expand image

The Association of Superannuation Funds of Australia (ASFA) has disputed the findings of a recent CPA Australia report that suggests the benefits of increased super balances are being eaten up by household borrowing to pay debt and fund lifestyles. 

In relation to CPA’s claims that lump sum benefits are being treated as a windfall for retirees, ASFA referenced a recent survey from Household, Income and Labour Dynamics in Australia (HILDA) that found that retirees who take their retirement savings out of the super system were in the minority. 

Even for this minority, there was no evidence that the super savings are used primarily for immediate consumption purposes such as overseas trips and cars as the report suggests, ASFA stated. 

In addition, there was no evidence to suggest that many retirees were using their super to pay off debt - especially due to the fact that only a minority of households have debt around the time of retirement, and generally have assets outside of super which more than match that debt, ASFA stated. 

Following recent swipes by the Industry Super Network at CPA’s paper, ASFA stated that “all academic and government research into the impact of compulsory superannuation on savings indicates that it has substantially lifted household savings”. 

“The charts in the CPA paper clearly indicate that household savings was around 3 percentage points higher in 2012 compared to 1992, when compulsory superannuation was first introduced,” ASFA’s statement read. 

The industry body also suggested that CPA stands alone in its assertion that the increase in superannuation wealth has largely driven the increase in borrowings by households. 

Rather, ASFA argued, the primary drivers of increased household debt in Australia and elsewhere have been financial deregulation and financial product innovation, increases in housing prices and the rise of negative gearing strategies. 

ASFA said it was vital that retirement incomes policy was based on sound research and long-term policy considerations.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Westpac has delayed its rate cut forecast, aligning with its peer NAB’s outlook on the likely trajectory for the Reserve Bank of Australia’s cash rate....

15 hours 37 minutes ago

The government’s adjustment to the Future Fund’s mandate could set a dangerous precedent, warns an economist, raising concerns that it may pave the way for problematic fu...

14 hours 56 minutes ago

The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remain...

17 hours ago