In the early 1990’s the Keating Government introduced a system of funding retirement through a mix of compulsory superannuation contributions.
The superannuation system forced all workers to save for their retirement in order to relieve the pressure on Australia’s aged pension.
Prior to the introduction of compulsory superannuation in 1992 the superannuation schemes that existed were only available to approximately 50% of the population, mainly for employees in higher paid positions – eg. Managers, CFO’s etc.
The Sole Purpose Test is a test that ensures a superannuation fund is maintained for providing benefits to its members upon their retirement.
Basically, it was a ‘forced savings’ for your retirement. Your employer would contribute to a selected superannuation fund on behalf of their employees. Any time you had excess funds you could also contribute over and above, within the guidelines.
But now in 2017 there has been speculation about using superannuation to allow young Australians the ability to buy a house, due to a housing affordability crisis in Australia.
There is an argument that allowing this to happen would blow up house prices further. Various parts of the government agree that it is a bad idea as it would only increase the demand for housing and drive prices up.
It seems that Mr Turnbull has ruled out allowing superannuation funds to be released to purchase a home, as it is inconsistent with the government’s policy objective for superannuation, ‘… to provide income in retirement to substitute or supplement the aged pension’.
Once the floodgates are opened, what’s not to say that superannuation funds could be released for other matters, which would go against the real purpose of why superannuation was introduced – providing benefits for retirement.
I think that it will be a matter of ‘watch this space’, I think everyone has their own opinion and only time will tell, but for the moment it may be off the table.
If you have any superannuation questions, call Optima Partners – Your Pathway to Personal and Financial Security.
Zoi Yannakis
ACCOUNTANT
