Family home recognised as third pillar of retirement funding by federal retirement income review launching this week
15 October 2019:
The family home could become a significant part of Australia’s retirement funding solution, after home equity was specifically included in the terms of reference for the federal government’s review of retirement income.
The first major inquiry into Australia’s retirement savings system begins this week and the three person independent panel has been tasked with identifying the role played by “voluntary savings, including home ownership” in Australia’s retirement funding system.
The family home’s inclusion was welcomed by Dr Joshua Funder, CEO and Managing Director of independent specialist retirement funding provider, Household Capital.
“For most Baby Boomers, voluntary savings outside of superannuation means the equity in their home. For Australian homeowners entering retirement, available home equity can double their superannuation and help fund their retirement for years to come.” said Dr Funder.
“As the federal government has affirmed in the terms of reference of the recently announced retirement income review, the family home is much more than housing. It’s a store of retirement savings in its own right that remains largely untapped as Australia looks for ways to adequately provide for retirees in a way that’s fiscally sustainable.”
With the Prime Minister and Treasurer publicly repeating their assurance that the government would “never” include the family home in the asset test for the age pension, Dr Funder says our homes can become a crucial part of the third pillar of Australia’s retirement income system. Their specific inclusion in the terms of reference reflects a shift in thinking about the role the family home could play within Australia’s complex retirement income system.
“Few people have much “voluntary savings” outside super and their home, so it makes sense for the third pillar to explicitly include the biggest pool of super savings in Australia – the $1 trillion already saved by retirees in their home equity” said Mr Funder.
“The notion that your nest is also your nest egg would be no surprise to the 4.5 million retired homeowners whose home equity is more than their superannuation savings.”
Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available on request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434. Australian Credit Licence 391876.