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Levy proposes super funds aid retirees in home purchases
The QAR lead has argued that super funds should help retirees purchase a home, noting that this would be more beneficial than receiving a pension.
In a submission to the Senate economics references committee’s inquiry into improving consumer experiences, choice, and outcomes in Australia’s retirement system, Quality of Advice Review (QAR) lead Michelle Levy stressed the importance of home ownership in retirement.
“Our retirement income system is said to be made up of three pillars: a means-tested age pension, compulsory superannuation and voluntary savings,” Levy said.
“But the retirement outcomes for retirees turn on many more things: including health and aged care, discounts and caps on pharmaceuticals, utilities and other goods and services, family relationships and, vitally, home ownership.”
Pointing to the Retirement Income Review final report, which noted that a “significant proportion of retiree households that rent are in income poverty, which is even higher for single retiree renters”, Levy said everything flows from a “secure home” in retirement.
“The superannuation system may well have a role to play in addressing housing insecurity and home ownership, but not on its own and not merely because the government would like superannuation funds to invest in social housing,” she said.
In order to address the issue of income poverty in retirement, Levy suggested “with some nervousness” that super funds should help retirees purchase a home.
“The Retirement Income Review found that the retirement income system was working relatively well except for those who did not own their own home,” she said.
“Expressed another way, the most significant contributor to retirement outcomes was not how much superannuation a person retires with, but whether they own a home. At the same time home ownership is declining and the government wants superannuation funds to invest in low cost housing.
“Is it possible that the most effective way a superannuation fund trustee could assist their members in the cohort of retiring or retired members who do not own their own homes would be to provide them with that home?”
While Levy’s proposal was short on specifics, she said that rather than a member’s superannuation balance paying a pension, it could be put towards the purchase of a house.
“The trustee’s contribution to the purchase price would be an asset of the fund and interest on that amount could be deducted from the proceeds of sale on the member’s death,” she explained.
“A home is not an annuity but, combined with an age pension, it might be more valuable.”
AUTHOR
Keith Ford
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