Josh Funder

Household Capital, a leading Australian provider of home equity retirement funding, called on superannuation funds to provide more solutions for their members to help them navigate and plan through the various stages of retirement and aged care.

“It’s imperative that superannuation funds deliver comprehensive solutions to members to ensure they can live well in retirement,” said Dr Joshua Funder, CEO of Household Capital.

“The reality is, for many Australian retirees, they do not have enough funds in their superannuation accounts when they retire. The simple fact is that baby boomers, who are in the process of retiring, have not captured a full working life of superannuation contributions.”

Dr Funder said it was important that the private sector worked closely with superannuation funds to provide the best outcomes for retirement planning and funding.

“Governments cannot be expected to completely carry the responsibility of retirement funding and aged care, particularly given that borrowing costs are rising globally and increasing taxes on younger generations to fund an ageing population would not be acceptable,” said Dr Funder.

“Super funds are the most trusted providers of retirement funding, but for most members in retirement now superannuation alone is inadequate to fund long and active retirement.

“For Australians in retirement, median  home equity already saved is around $800,000, three to four times the value of household superannuation.

“Australian retirees have already saved over $1 trillion in home equity which can transform retirement outcomes. Delivering straightforward access to superannuation and home equity retirement funding is what retirees need to access their wealth and have confidence in the system.”

In 2019, the Retirement Income Review led the world in declaring home equity the third pillar of Australian Retirement Funding. The subsequent Retirement Income Covenant means that from 1 July 2022, superannuation funds will have an obligation to provide cohorts of members with retirement funding strategies including not just superannuation but also access to other assets.

“Australian median retirees are the richest in the world, however home equity is typically three-to-four times the value of median superannuation,” said Dr Funder.

“Baby boomers do have considerable wealth if we factor in the value of their home as an asset.

“What’s critical is to consider ways to allow the nation’s retirees to safely and responsibly unlock the value stored in their home alongside their superannuation. ”

Professor Deborah Ralston, co-author of the Retirement Income Review and chair of Household Capital’s Advisory Board, described the retirement income covenant as about providing assistance to individuals going into retirement to set themselves up.

“Ideally, in retirement you want a reliable income stream, you want access from time to time to small amounts of capital, and thirdly, you want to have some kind of longevity risk protection so you don’t have that fear always of running out of funds,” said Professor Ralston.

“Retirement planning doesn’t end at retirement, that’s important to know. That’s also a dynamic period of time; at retirement 45% of people are on the Age Pension, but by the age of 80, around 80% of people are reliant on the pension because superannuation balances are not significant as yet for most people.”

Dr Funder said retired Australians deserve more. “Home equity can play a major role in providing access to wealth, adequate retirement funding, and confidence for a generation,” he said.

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