CALENDAR

OF EVENTS

Tuesday, May 7
Balance of trade

NAB business confidence

RBA interest rate decision

Thursday, May 16
Westpac consumer
confidence

Unemployment rate

Saturday, May 18
Federal election

First home scheme

gets a makeover

Earlier access to funds boosts opportunities for would-be buyers

A

mong all the budget and election noise in April,

federal parliament passed new laws that aim

to improve superannuation member outcomes,

including implementation of two recommendations

from the banking royal commission. One of the most

important was an amendment to the First Home

Super Saver Scheme (FHSSS).

The new legislation means individuals can enter a

contract to buy or build their first home at an earlier

time and still have access to the scheme rather than

waiting for funds to be released from their super.

They must have applied for and received a FHSSS

determination and applied for their super release

within 14 days of entering the contract.

What will come as a relief to some first home

buyers is that the new law is being retrospectively

applied from July 1, 2018. This means “individuals

who have a determination, made a valid request

for release from the commissioner and enter into a

contract to purchase or construct their home on or

after July 1, 2018 will satisfy the requirements of the

First Home Super Saver Scheme”.

Other conditions include: The price for the

purchase or construction of the premises is at

least equal to the amount requested for release;

the individual has occupied the premises, or

intends to occupy it as soon as practicable; and

the individual intends to occupy the premises

for at least six of the first 12 months that it is

practicable to occupy the premises.

Aside from the FHSSS, the legislation also

implements two recommendations of the banking

royal commission. It bans super funds from inducing

employers and extends civil penalties to super fund

trustees – in addition to civil and criminal penalties

for directors – for breach of their best-interests duty.

APRA’s regulatory powers have also been given a

boost to take preventive or corrective action where

a super fund is not acting in the best interests of

members. APRA also has more power over the

authorisation process for default MySuper products.

Finally, the government is making super funds

more accountable for how they spend members’

money through new expense reporting methods,

annual members’ meetings and an improved

portfolio disclosure regime.

These are sensible changes and hopefully they

restore more trust in banks and super funds and

align with parliament’s original intentions.

DARREN SNYDER

THE BUZZ

ON MY MIND

Protection against poverty

THIS MONTH

NEWS

&

VIEWS

J

ust as medical vaccinations

rely on immunity of the herd

to protect against diseases,

superannuation relies on the par-

ticipation of the herd to protect us

all from poverty in retirement.

Today, one in four people sits outside the super

system. That may be because they are working in

the gig-economy, are self-employed, are at home

caring for children or parents, or other reasons.

The percentage of the population covered by

super is in decline and unless we act now to

include these outliers many more people face

a bleak retirement, living in poverty.

The simple fact is that the more people in the

superannuation system, the better off we will all be,

for two reasons. First, increasing the level of private

savings for more people in retirement means more

will be self-funded for longer, thereby reducing pres-

sure on government budgets and enabling a decent

age pension for those who need it. Second, the

greater the number of people in the super system,

the greater the economies of scale, which benefits

us all in the form of lower fees, better services and

enhanced ability to manage liquidity requirements

for the retirement phase.

Martin Fahy, chief executive, Association of Super-

annuation Funds of Australia (ASFA).