Media Release

Raiding super to pay off HELP debts would compromise retirement outcomes: ASFA

21 January 2016

Raiding super to pay off HELP debts would compromise retirement outcomes: ASFA

The Association of Superannuation Funds of Australia (ASFA) has urged caution regarding a proposal to allow individuals with a tertiary education fees debt (HELP debt) early access to superannuation to pay off that debt, citing its negative impact on retirement outcomes.

ASFA recommends that before any proposal to extend the uses of superannuation is considered, there should first be agreement on the purpose of the superannuation system. Current compulsory contributions will not be sufficient to finance the retirement income needs of many Australians and use of superannuation for other purposes would further compromise the achievement of an adequate level of income in retirement.

“Any proposal allowing early access to superannuation to address the funding of pre-retirement needs comes with a number of problems, the most impactful being the exponential loss of compound interest within a long-term investment like super,” explained Pauline Vamos, CEO, ASFA.

“For someone in their late 20s, each dollar contributed to super will amount to seven more in future dollars at retirement age due to compound interest. It just doesn’t make sense to forgo these future earnings to repay what is essentially an interest-free debt.

“If a person aged 30 on a salary of $60,000 per year took out $25,000 to repay a HELP debt, their final retirement savings at age 67 would be reduced (in today’s dollars) by $54,000. This would be enough to take the average balance of $429,000 (for a person of this demographic) down to $364,000, far below the estimated amount required to maintain a comfortable standard of living in retirement.

“It also does not make financial sense for an individual to pay off a debt that attracts interest at around 2.5 per cent per year by reducing their superannuation savings which have investment earnings of around 7 per cent a year on average.”

ASFA has also cautioned that such a system might actually have a high cost to government rather than providing greater revenue, due to foregone tax income flowing from people on higher salaries using salary sacrifice into superannuation to then repay their HELP debt.

“If we do not focus on Australians having enough in their retirement to pay for future expenses, particularly the ballooning health and aged care costs, we could see an even more dramatic negative impact on the economy,” added Ms Vamos.

“With any proposal, a balance must always be struck between the benefit and the practicalities and the costs of implementation, including to the funds and to their members.

“If the repayment schedule for HELP debt is too harsh then this issue should be examined independently, rather than compromising the financial stability of our future retirees,” concluded Ms Vamos.

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.