A Coalition proposal to bust open superannuation could leave every worker tens of thousands worse off, even if they don\u2019t access the scheme, new Industry Super Australia analysis shows.<\/p>\n\n\n\n
Under the scheme, funds would be forced to carry more cash \u2013 a lower performing asset \u2013 this means every Australian with a super fund could have less at retirement.<\/p>\n\n\n\n
A 30-year-old on the median wage with a $20,000 starting balance could be between $14,700-$29,100 worse off at retirement, regardless of whether they accessed the scheme or not (today\u2019s dollars).<\/p>\n\n\n\n
The increased liquidity requirements would lead to less investment in long-term growth-oriented assets.<\/p>\n\n\n\n
ISA modelling shows the liquidity requirements mean annual returns across investment portfolios could fall 10-20 basis points, depending on the demographics of the fund and existing asset allocations.<\/p>\n\n\n\n
The Prime Minister compared the Coalition\u2019s scheme with New Zealand\u2019s super system \u2013 that allows super for housing – but most New Zealanders gets 1% less per year than Australians.<\/p>\n\n\n\n
KiwiSaver balanced option returns delivered around 1.0% per annum less than Australian balanced MySuper products over 5 and 10 years and held around 13.5% less in growth assets than Australian counterparts (see table 1 below).<\/p>\n\n\n\n
The New Zealand Retirement Commission has confirmed part of the reason for KiwiSaver\u2019s poor performance can \u2018likely be linked to first home deposit withdrawals\u2019. The KiwiSaver experience also confirms funds need to carry more liquidity partly to meet withdrawals for housing deposits, making returns unfavourable to the best Australian industry funds.<\/p>\n\n\n\n
If take-up in Australia mirrored New Zealand, funds would have to process almost 250,000 applications for super withdrawals each year for first home buyers, and if average withdrawals were $37,500, total funds released would be equal to $9.4 billion per annum.<\/p>\n\n\n\n
As first home buyers make up a third of all purchasers this flood of extra money can only jack up house prices \u2013 as government minister Jane Hume has admitted \u2013 making housing affordability worse. <\/p>\n\n\n\n
Price surges would quickly gobble up any extra money first home buyers could take out of super, as ISA analysis shows<\/a> the nation\u2019s five major capital city median property prices could jump by between 8-16%.<\/p>\n\n\n\n Industry Super Australia Chief Executive Bernie Dean<\/strong> said:<\/p>\n\n\n\n \u201cEven those Australians that don\u2019t use their super to buy a house will be left tens of thousands of dollars worse off because of the government\u2019s scheme.\u201d<\/em><\/p>\n\n\n\n <\/a>\u201cNew Zealand might beat us at rugby, but Australia is better at growing workers\u2019 retirement savings.\u201d<\/em><\/p>\n\n\n\n \u201cNot only will throwing super into the housing market jack up prices and make houses less affordable, but all Australian workers will also be worse off because of lower investment returns.\u201d <\/em><\/p>\n\n\n\n \u201cSuper is meant to be for people\u2019s retirement, not supercharging house prices and pushing the home ownership dream further away.\u201d <\/em><\/p>\n\n\n\n Table <\/strong>1<\/strong> \u2013 Australian MySuper vs New Zealand\u2019s Kiwisaver (median) <\/strong><\/p>\n\n\n\n