Reskilling: A worthy purpose for super?

A leading academic is calling for early access to superannuation for the purposes of education and retraining, especially as the risk of losing one's job to automation grows.

Speaking at the opening session of the SMSF Association's 2018 National Conference this morning in Sydney, La Trobe University pro-vice chancellor Phillip Dolan said while Australia's ageing population has the potential to cause labour shortages, technological innovation will leave scores of people out of work and in need of reskilling.

He said the ability for people who do lose their jobs to be able to draw down their super for retraining purposes needs to be considered.

"Rather than a linear pattern where you build your superannuation up and then you run it down post-retirement, a 45-year old who through no fault of their own is made redundant because of technology should be able to draw that money down to retrain, affording them another 20 years in the workforce," Dolan said.

It's difficult to think of a better investment their super could make than in the human capital of the member themselves as the move would see them remain in the workforce and continue accumulating superannuation, he said.

Having such an option would relieve the Government of pressure to provide greater amounts of welfare, as well as significantly lessen the associated longevity risk of commencing permanent draw down so early on, Dolan added.

He believes super reform over time will see such a measure legislated but said it must contain a certain standard of accreditation to prevent people handing their super over to "shonky education providers and get no benefit out of it."

While conceding it to be a worthy purpose, BT Financial Group general manager, superannuation, Melinda Howes said the longer term impact such an allowance would make on people's super balances could prove substantial.

Howes said current life expectancies calculated by the Australian Bureau of Statistics - men living to 79 and women to 84 - don't account for innovation. When considering various improvements across a range of factors, Howes said it is more realistic that by 2050 men will live to age 96 and women to 97.

"My concern with this is that you need to consider those very long life periods and the fact that we're only at 9.5% SG now, and there is a lot of very strong research showing that we need to be at 12% to fund the current promises we've made," she said.

Howes added that every additional purpose of super proposed must recognise an additional contribution will be required to fund it.

"Any discussion of expanding the purpose of super needs to be linked to a discussion of how much extra Australians are willing to contribute above 12% to fund the new purpose, and is this a logical balance of current versus future consumption?" she said.

Read more: superannuationSMSF AssociationABSAustralian Bureau of StatisticsBT Financial GroupLa Trobe UniversityMelinda HowesPhillip Dolan
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