Yahoo Finance Calls for Aussies to use superannuation to fund aged care: ‘Unfair’
A bold new proposal could see Aussies dipping into their super savings to pay for their aged care.
There are calls for a major overhaul of the way we pay for aged care in Australia, with one group proposing Aussies could dip into their superannuation savings to fund the costs.
An issues paper by industry peak body Aged and Community Care Providers Association (ACCPA) said chronic underfunding for aged care services had resulted in the sector becoming “unsustainable”.
The paper recommended a range of potential solutions to solve the funding problem, including major changes to the superannuation system.
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One possible solution was getting Aussies to “ring-fence” a portion of their super contributions to pay for aged care costs. Another was changing the tax treatment of super funds that are withdrawn specifically to pay for aged care.
Other possible solutions included introducing a Medicare-style levy for aged care, bringing in a new social-insurance scheme and introducing a means-testing regime.
ACCPA CEO Tom Symondson said every Aussie deserved access to high-quality aged care, regardless of their location, income or financial means.
“Following discussion by a broad group of stakeholders, the paper identifies that those with the means should be asked to pay, or partly pay, for those expenses they have paid for their entire lives. That includes accommodation and lifestyle expenses,” Symondson said.
“The superannuation system is designed to provide an income during retirement, enabling people to remain financially independent as they age. We want to see a system that encourages use of superannuation as it was intended.”
‘Worse off’
Industry Super Australia chief executive Bernie Dean said forcing Aussies to use a portion of their super for their aged care costs was not the answer.
"While there is an important conversation to be had about providing care for Australians as they enter their later years – ringfencing a portion of super is not the answer to the funding problems in aged care,” Dean said.
“Commandeering a portion of the super guarantee for aged care is unfair to those who won’t need it and diminishes the ability for many Australians to save for the other things they need in retirement. It would leave retirees and the taxpayer worse off."
The issues paper noted that the compulsory-savings approach could disadvantage retirees who didn’t need aged care or who only needed limited support. It also noted it was a complex solution and would require legislative change.
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