12 September 2023
Superannuation to raise living standards, lower future age pension cost burden
The Association of Superannuation Funds of Australia (ASFA) calls for innovative thinking by the Aged Care Taskforce to address the growing aged care needs of Australians.
ASFA’s submission to the Aged Care Taskforce focuses on providing a fact base in order to assess future aged care funding arrangements.
Despite recent commentary on super balances when people pass away, ASFA research finds that Residential Accommodation Deposits (RADs) paid to aged care providers are a much greater source of inheritances than unused superannuation balances, by a factor of three to one.
ASFA Deputy CEO Glen McCrea said superannuation is there to assist people with handling the unforeseen challenges that life and retirement invariably bring.
“Calls to ring fence superannuation for increased aged care costs would create unnecessary complexity and cost and reduce flexibility for older Australians.”
“Many current retirees do not have a large amount of superannuation from which to fund increased aged care costs. In fact, only a small minority of Australians aged over 80 have any superannuation at all,” said Mr McCrea.
However, ASFA believes there are possibilities for superannuation funds to play an important role in helping meet the future aged care needs in Australia, by providing investment capital and by holding direct or indirect interests in the property assets used to provide aged care accommodation services, on commercial terms.
Alternative capital arrangements could also be developed for aged care premises, such as the establishment of Real Estate Investment Trusts (REITs). Provided the return and risk profile was appropriate, superannuation funds potentially would be investors in assets which could hold residential aged care facilities and lease them to providers of aged care services.
ASFA awaits the findings of the Aged Care Taskforce report later this year.
For further information, please contact:
ASFA Media team: 0451 949 300
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system, so all Australians can enjoy a comfortable and dignified retirement.