In an address at today’s SMSF Association conference, BT General Manager Superannuation, Melinda Howes, has reinforced that while there are always going to be calls for superannuation money to be directed elsewhere, it should exist principally for retirement.
Ms Howes said there will always be a place for superannuation money to meet worthwhile needs, however superannuation should be quarantined for longer term savings. This is critical if we are to preserve the integrity of our first-class retirement savings system and will ensure Australians have access to their long-term savings when they most need it.
Ms Howes also said health care and aged care costs in retirement can be considerable and members should strongly consider seeking advice early so these expected costs can be factored in when projecting retirement outcomes.
She further stated that recent calls supporting accessing super for purposes other than funding retirement, such as elective, non-critical health issues do raise some concerns.
“The system already has in-built provisions for access in special circumstances including for compassionate grounds and hardship, and these are assessed on a case by case basis. But calls to use super which go beyond this, which are for discretionary uses, will only muddy the waters and confuse super’s core purpose,” Ms Howes said.
“This is heightened by the fact that Australians are ageing and living longer than ever before. If the gates to access super are opened for other matters, this will potentially leave Australians worse off in the longer term” she said.
“Australians are lucky enough to enjoy one of the longest life expectancies in the world. Australian males have the third highest life expectancy in the world, while Australian females enjoy the sixth highest life expectancy.1
Ms Howes said “Living longer presents both a blessing, but potentially also a problem. We could live up to twice as long in retirement as we expect. But how will our longer lives be funded?”
Ms Howes said “To ensure Australians can enjoy a dignified life post-retirement, super must be kept to its core focus for funding retirement and not get derailed. To adequately fund retirement we know that we need super contributions at 12% not the current 9.5%. Any discussion of expanding the purpose of super needs to be linked to a discussion of how much extra Australians are willing to contribute above 12% to fund the new purpose, and is this a logical balance of current vs future consumption?”
1 ABS, 18 Oct 2017, ‘Female life expectancy continues to climb’
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