First home buyers should not be forced to choose between a home and their retirement savings: FSC

The Prime Minister unveiled the policy at his campaign launch in Brisbane on the weekend that will allow workers to withdraw up to $50,000 but the scheme won’t start until 1 July 2023.

There are no income or property caps under the scheme, with eligibility restricted to first home buyers who must have separately saved 5 per cent of the deposit.

The FSC chief executive Blake Briggs said the policy will undermine the purpose of the superannuation system and could force up to 5.3 million young Australians to decide between owning a home or their retirement savings.

“The FSC is concerned the Government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement,” he said.

“The FSC recognises there is a correlation between renting in retirement and poverty amongst older Australians, but Australians should not have to choose between a home and their retirement savings.

“The Government’s own majority report into ‘Housing Affordability and Supply in Australia’ concluded that superannuation should only ever be used for housing if there were commensurate measures to increase supply.

“The Government’s supply measure only extends downsizing to 1.3 million households, whilst potentially allowing approximately 5.3 million under 35-year-old Australians that do not yet own a home access their superannuation to buy a first home. The Government has an obligation to do more to boost supply, otherwise unleashing superannuation savings on the housing market risks driving prices higher still.”

The proposed scheme is also accessible for couples if both members are eligible and buyers can only buy the property for owner-occupier purposes and must live in the home for at least 12 months. 

Individuals must apply through the ATO to access the scheme and it will apply to both new and existing homes and the amount invested will be returned to the superannuation fund once the home is sold. If the home is not purchased, the money must be returned to the fund. 

The amount to be repaid (to the super fund) equates to the original amount invested from the superannuation, together with a proportionate share of any capital gain or loss from the sale of the property.