Super Saver Scheme breaches sole purpose test

8 August 2017
| By Mike |
image
image
expand image

The Federal Government’s First Home Super Saver Scheme (FHSSS) is not consistent with the Superannuation Industry (Supervision) Act (SIS Act) sole purpose test, according to the Australian Institute of Superannuation Trustees (AIST).

In its submission to the Treasury dealing with the FHSSS Budget measure, the AIST said it had a number of “significant reservations” about the measure, not least of which being breaching the sole purpose test.

“The sole purpose test generally requires that superannuation funds be required to maintain benefits for members’ retirement, or for insurance related purposes,” it said. “The FHSSS is not consistent with this objective, nor is it consistent with the Bill (currently before Parliament) which proposes to enshrine an objective of superannuation.  The objective will see super’s purpose explicitly stated to provide income in retirement.” 

“The use of a superannuation fund for a deposit on a first home does not satisfy either of these.  The FHSSS will see superannuation funds needing to change their operations to accommodate money that is not intended to be used in retirement,” the submission said.

It said the issues around accommodating such monies were many, and appeared to provide a far more complex solution for first home savers than methods employed previously, most notably the First Home Saver Accounts scheme.

“AIST has supported a version of the objective which ensures adequacy in relation to the retirement income.  We believe that given the possibility that in periods of low returns, amounts from mandated contributions will be available as First Home Super Saver amounts, this could also reduce retirement incomes for Australians,” the submission said.

“We also note that there appears to be little discussion of equity issues related to this measure.  In particular, we note that members drawing money out for a home loan are taxed far more leniently than an equivalent member taking a financial hardship amount.”  

“Finally, we consider that that the impact on housing affordability or administration issues associated with this measure does not appear to have been subject to a cost-benefit analysis,” the submission said.

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. ...

10 months 1 week ago
Kevin Gorman

Super director remuneration ...

10 months 2 weeks 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 ...

10 months 2 weeks ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

1 day 15 hours ago

Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award....

2 days 6 hours ago

APRA data shows the CFMEU accounted for 28 per cent of super fund industrial contributions, with the shadow treasurer calling for a prompt investigation into the payments...

3 days 10 hours ago