We also have concerns around the restrictions on participation. The proposal requires that individuals put up $1000 up front to establish the account, that an individual must contribute at least $1000 in at least four years, that a minimum entry age of 18 years applies, and that an overall lifetime cap of $50,000 on contributions applies. Our submission calls on the Government to remove the first three of these restrictions, and increase the lifetime cap to $100,000, to better reflect the current and projected cost of homes in our major capitals.

We believe that the FHSA concept has the potential to improve young people’s savings habits, and that, far from competing with superannuation for consumers’ savings dollars, it will encourage people to go on contributing regularly to their super after they have purchased their home. By making the product more flexible for younger people, with mobile lives and stop/start employment patterns, those who find saving most difficult will have a chance to get started. Financial services disclosure is also emerging as a focus for policy reform for the new Government. AIST supports the Government’s proposed “template” approach to disclosure for FHSAs, and we are participating in the Government’s Financial Services Working Group, investigating options to extend this approach to super and other financial products.

A major challenge for the superannuation industry is to foster consumers’ confidence in the retirement incomes system. FHSAs, as the first primary savings vehicle used by many young people, will be crucial in building this confidence. AIST does not support commissions being paid from FHSA products, as the impact on savings will erode not only savings outcomes, but also consumer confidence.

Andrew Barr is the AIST’s policy and research manager.

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