The review also noted that “using superannuation assets more efficiently and accessing equity in the home can significantly boost retirement incomes without the need for additional contributions”.
Mr Cooper, who undertook a 2009 review of the super system for the Rudd government, said the family home had been put on a pedestal in Australia and there were significant issues in encouraging the uptake of products such as reverse mortgages which had been successful in other countries.
Very challenging debate
“It’s exempt to the age pension, it’s CGT [Capital Gains Tax] exempt and it’s also not subject to any inheritance tax,” he said, so there is little incentive for people to draw down on the equity in their home over handing it down to their children.
“We’ve got to come up with a way of making people actually confident to spend that money down, otherwise we’ve got a broken system in retirement, so that’s a huge challenge.”
Martin Fahy, chief executive of the Association of Superannuation Funds of Australia, said changing attitudes towards the family home and encouraging people to draw down every last dollar until they die was “very challenging”.
Labor labelled the idea of greater draw downs, combined with the government’s strong indication it will freeze the super contribution guarantee rate at 9.5 per cent in the May Budget, “political dynamite”.
“What they are saying is that if 9.5 per cent is not enough [for a dignified retirement], then people can just sell their home. Is that really an argument they want to take to an election?” Labor’s Stephen Jones said.
Former Prime Minister Paul Keating likened a move towards freezing the super guarantee rate and encouraging more people to draw down on the equity in their home as forcing people to “eat your house”.
Incomplete information
Industry Super Australia, the lobby group for industry super funds, questioned the adequacy of retirement modelling used by the review’s author, claiming it did not consider the impact of the coronavirus early release super scheme.
The scheme allowed people who lost their jobs or had hours cut due to COVID-19 to withdraw up to $20,000 from their accounts in two tranches. The government expects $42 billion to be withdrawn by year’s end.
However, the Retuirement Review did model the effect on retirement incomes of withdrawing two $10,000 amounts over two years finding a person withdrawing $10,000 in two consecutive years from age 30 would lower their superannuation at retirement by $40,300 in wage-adjusted terms.
ISA chief executive Bernie Dean said: It was always going to be tough to review the whole retirement income system during a pandemic, but you cant base decisions that will affect peoples lives on a report that ignores how almost a quarter of the workforce have just tapped into their super, fundamentally changing what their retirement will look like.”
We need debates about super to be based on credible and complete information because its peoples money were talking about.

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