Doorstop interview: Early access to superannuation

 

The Government has got a compulsory superannuation system to protect retirement incomes into the future. People are forced to defer 9.5 per cent of their wages today so that they have a retirement income into the future. It’s critical that we protect that, but it’s also important to note that there are times where people undergo severe stress and hardship. It could be when they’re suffering from a serious medical condition, or where they’re suffering from serious financial hardship. It’s appropriate that in those circumstances, people be given access to their money on an early basis. The rules on this have not been changed for around 20 years. The Government is currently reviewing it to make sure it strikes the right balance, so that we can protect members’ retirement savings and we can ensure that where it is appropriate, they get access to their money because they’re suffering from severe financial hardship or from a serious medical condition.

 

Are there any questions?

 

 

Does the Government need to re-think access to super funds for things like medical expenses?

 

 

Well we have seen that there has been a significant increase in the amount of money that has been released early from superannuation. In 2002 there has been money released of about $42 million and the 16 years following we’ve seen that go up to around $242 million. But in the grand scheme of things, that money is a very small percentage of the $2.5 trillion that is protected in our superannuation system. Of course, we want to make sure that people get access to their money where it is appropriate but that we strike the right balance, that we make sure we are protecting people’s retirement incomes. Because at the end of the day, that’s money that they are going to need when they do retire.

 

One of the things that seem to be coming out today is that people seem to be dipping into their super for bariatric surgery, for weight loss and things like that. That has obvious flow-on benefits for the health system. Should the Government be looking at maybe subsidising these things instead of getting people to dip into their own super?

 

Well it’s very important to note that the Health Minister Greg Hunt has initiated a review by the Chief Medical Officer Brendan Murphy to look at out-of-pocket medical expenses. That review is ongoing, because there are concerns about the costs of some of these procedures. Clearly though, the Government is really interested in making sure that people have their retirement incomes protected through our retirement income system and we strike the right balance and give early access to peoples’ money where they’re suffering from a serious medical condition, or where there are severe financial difficulties that they’re undergoing. But this is an open review and we would invite people to make their contribution to this review and to give their perspective on these important issues. 

 

Should young people be able to access their superannuation – if we’re going to be looking at revising access to super – for things like buying a house?

 

We absolutely want to help young people to be able to get into the housing market, which is why the Government has got a very clear package of housing affordability measures to make it easier for young people to save for a deposit inside of the superannuation system. The first home owners’ superannuation saving scheme, which was introduced in the Budget last year, was bitterly opposed by the Labor party but it is something that we have been able to legislate through the Parliament. It will mean that couples will be able to save up to $60,000 and get the benefits of those tax breaks that do apply to the superannuation system. 

We’re also incentivising the release of more family housing because we’re allowing those people who sell their family homes, who downsize, to be able to contribute part of the proceeds of the sale of those properties into their superannuation and we’re cracking down on foreign investors who have illegally purchased properties in Australia. We have cracked down on them by saying no, they cannot purchase established homes and we have sold up on properties worth more than $100 million and we will continue to do so. 

The Labor party, when they were last in government, not only didn’t sell up one illegally purchased property, but they actually opened it up to make it even easier for those people to do the wrong thing.

 

 

Just one final question – talks are underway between North and South Korea today. Do you think this is encouraging that there could be more talks [inaudible]?

 

 

It is good news to hear that there is dialogue happening in North Korea around what is a very fraught situation in North Korea. The Government does welcome this, I’m obviously not the foreign Minister, we’ll wait and hear the outcomes of these discussions and these talks at this very critical time.

 

 

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