The Liberal Party is working on three options to allow workers to access super to buy a home including using super as an offset to their mortgage, or as collateral to get a bigger loan.
News.com.au can reveal that the Coalition is considering the bombshell plan to reduce the rising number of Australians who retire without owning their own home.
The three options under consideration include using super as collateral to get a bigger loan, using it as an offset on your mortgage to reduce interest or cashing it out to enter the housing market.
Retired renters
Liberal frontbencher Andrew Bragg confirmed that he believes the biggest issue that needs to be tackled in the retirement space is the growth of retirees who can’t survive on the aged pension because they are still renting when they retire.
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But he stopped short of outlining the options under consideration.
“The big challenge here is that we see a doubling of retired renters over the next couple of decades. That’s a trend we want to kill because we want people to be in their own house when they are retired,’’ he said.
“We are transitioning to a country where too many people are not going to own a house in retirement, which is not what we had back in the ‘90s when we had the big debates on national savings.”
Current super rules
Under current Australian law, you cannot use your standard superannuation balance as a mortgage offset account or as collateral to enter the market.
Australians who do not own homes face long-term financial impacts and it is regarded as a ‘defining factor’ of people who experience financial hardship or stress in retirement.
A Senate report canvassed the option in 2024, arguing that a superannuation for mortgage offset scheme would involve establishing a mechanism by which a homeowner with an outstanding mortgage balance could opt to allocate part of their superannuation savings to a mortgage offset facility.
MORE: Can you use superannuation to buy a house?
“This would reduce the interest payable on the mortgage and/or expedite repayment of the principal loan balance, thereby allowing for the mortgage to be discharged sooner,’’ the report stated.
“Once a mortgage has been paid off, the funds in the mortgage offset facility could be transferred back to the homeowner’s superannuation fund.
“Further, the homeowner may then have money available (in the absence of a monthly mortgage repayment) to make additional voluntary superannuation contributions.”
In 2022, a parliamentary report also floated the option of using superannuation as security for first-home buyers wanting to get onto the property ladder.
Asked on Sky News if the Coalition remains wedded to the 12 per cent superannuation guarantee, Mr Bragg said the Coalition’s superannuation policy was “under review.”
“Our policy has been that we have wanted people to have more access to their own money,’’ Mr Bragg said.
“We are reviewing the intersection of the retirement and housing policies. I can tell you that much.”
“Like 32 per cent of the lump sums out of super were used to pay off mortgages, right?
“According to the latest ABS data, which is a large sum of money. So we just want to make sure that everything is calibrated to make sure that people have the maximum amount of choices.
“Home ownership transcends economics. It’s also psychological, and having a house in retirement is your best bet for a safe retirement.”
One Nation’s super plan
One Nation’s plan to allow workers to cash out 3 per cent of super for three years as a pay rise would leave couples $50,000 worse off in retirement and could boost inflation.
Modelling by the Super Members Council shows a median full-time worker withdrawing 3 per cent of contributions for three years would be $25,000 poorer by retirement under the plan.
For a couple it would be more than $50,000 worse off or even more if they are high-income earners.
“Turning super into an ATM is a reckless idea that would make battling Australians poorer,” said Super Members Council chief executive Misha Schubert.
“This would belt battlers – not help them – by damaging their super and their retirements and driving up both inflation and interest rates which would make the cost-of-living pressures even worse, not better. We urge One Nation to ditch the idea.”
Treasurer Jim Chalmers slammed the plan on Monday, declaring the next election would be a referendum on protecting Australia’s super system.
“It’s now beyond doubt that any Coalition government with One Nation in it will cut your super,” he said.
“This will end superannuation as we know it and make millions of Australians poorer as a consequence.
“One Nation is anti-super because One Nation is anti-worker. You can’t be pro-worker and anti-superannuation.”
But Senator Pauline Hanson hit back accusing the Treasurer of “buggering” the economy.
“Jim Chalmers is acting hysterically over a proposal that would let someone struggling to pay their rent or mortgage keep 9 per cent going into super instead of 12 per cent, and take the 3 per cent difference as a tax-effective pay boost for up to three years,” the One Nation leader said.
“Perhaps if you hadn’t so thoroughly buggered the economy, Jim, they wouldn’t need to.”
‘$44 a week’
The proposal, revealed on Monday, would allow workers to cash out their super for a pay rise worth up to $12,900 over three years for couples with a combined income of $160,000.
One Nation said it would allow workers “the choice” to take a portion of their future compulsory super contributions as a concessionally taxed 3 per cent pay boost for up to three years.
“For a full-time worker earning about $90,500, that means around $2,300 a year after tax, or $44 a week, extra in their pocket,” Senator Hanson said earlier.
“For a working couple earning $168,000 between them, it is about $4,300 a year after tax, or $82 a week, back in the family budget.
“That’s a real boost to help you pay the rent or the mortgage, leaving more room for groceries, power bills and the costs of raising a family.
“Your existing super won’t be touched. Not one dollar.
“If you take the boost, at least 9 per cent will continue going towards your retirement and the choice is limited to three years.”
Employers would keep paying the full 12 per cent into your super fund as they currently do.
“You make the choice directly with your super fund and they will administer the payment,” Senator Hanson said.
“If you want the full 12 per cent to stay in super, nothing changes.”
Speaking on Sunrise, Barnaby Joyce said it was workers’ money and they should be able to access it.
“Most people, as you know, Nat, they’re not going to just take money out if they’re not doing it tough. But if they need the money, they say, ‘I can’t get through. They’ve got to ask for it. OK?’” he said.
Labor frontbencher Tanya Plibersek said it was now clear One Nation wanted to raid super.
“One Nation wants you to raid your super instead of getting a pay increase,” she said.
“We want people to retire with dignity. Pauline Hanson’s been out there saying Australian workers are lazy and they should be easier to sack, and they haven’t backed those increases to the minimum wage.”
Sunrise host Nat Barr said it “ends up being a lot of money that you’ll lose down the track.”
“People aren’t stupid. We give them credit for more brains than the Labor Party does, and if they say, ‘Well, if I lose my house now, I’m going to be hundreds and hundreds of thousands of dollars out,’” Mr Joyce said.
In fact, if you are risk of losing your house you already can access super early in some circumstances under existing guidelines. Mr Joyce said the current rules were too “convoluted”.
The Australian superannuation system currently holds over $4 trillion in total retirement assets, making Australia a global superpower in retirement savings.
Senator Hanson has argued that the super system is not resulting in the reduction of people claiming the aged pension that had been expected.
Housing for super plan
Senator Hanson has previously backed calls to use super for housing, with important caveats.
Upon a sale of the property, proceeds commensurate with the superannuation investment would be returned to the fund.
“We brought out the policy that you could use the superannuation to put a deposit on your own home loan,” she said.
“Superannuation should be lightened up a bit so people can utilise this money in times of crisis. It is their money.”
How the system works now
According to the Australian Taxation Office (ATO), existing guidelines allow you to access your super early in limited circumstances on compassionate grounds, as well as terminal illness, incapacity and severe financial hardship.
The reasons include medical treatment for you or your dependant, medical transport, modifications to your home or vehicle relating to special needs arising from a severe disability, palliative care, death, funeral or burial expenses for a dependant and preventing foreclosure or forced sale of your home.
According to recent data, there were 93,500 applications to the ATO for early access last year under the medical treatment category for compassionate release.
Around one in three applications were rejected by regulators, while a total of $1.4 billion in super was approved for release.
Liberals consider super overhaul
Liberal leader Angus Taylor is under pressure from his own frontbench to consider a radical overhaul to superannuation.
Outspoken Liberal Senator Andrew Bragg has confirmed he believes that compulsory super is a failed policy that’s ripe for a rethink.
Mr Bragg set the hares running last month with a speech at the National Press Club before making further comments to ABC Radio on Thursday that the super guarantee was a failed policy.
“It hasn’t worked,” Mr Bragg said.
“I mean, it’s one of the biggest public policy failures since federation, in the sense that it hasn’t helped the budget, and it has not really helped many people get off the pension.
“What it has done is it has created a huge viper’s nest for banks and financiers and unions to pilfer, which is why what you saw at the Labor Party conference was now you’re going to have super for under-18s, and soon you’ll have super for cats and dogs.”
Senator Bragg hasn’t tried to hide his views in the past, calling for an end to compulsory super.
“Mandates are always costly,” he told the National Press Club.
“And in this case, it takes 12 per cent from people’s wages to vest them with managers they will never meet. It is a loss of liberty.
“As I said in my first speech, compulsory super remains a strange but huge illiberal experiment. So, you’ve got to ask yourself, what was the point of a scheme that gave you no public finance benefit and minimal personal benefit?”