Aug 04, 2023

Superannuation for aged care? Peak body calls for changes to super

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The Government’s Assistant Treasurer, Stephen Jones, has thrown his support behind the exploration of super savings for aged care funding. [Source: AAP Image/Mick Tsikas]

A new Government submission pitched by the peak body for aged care providers has suggested a portion of superannuation could be set aside to specifically fund aged care services in retirement, easing the sector’s financial burden.

Key points

  • By allocating a set amount of super for aged care, individuals would be able to afford better support services while reducing the leftover funds used for bequests or inheritance. 
  • According to research conducted by the former Scott Morrison-led Liberal Government, $1 in every $5 of retirement savings was passed on as a bequest, and that’s predicted to increase to $1 in every $3.
  • However, most Aussies would forego their inheritance if it meant older relatives would receive high quality aged care

Earlier this week, the Aged & Community Care Providers Association (ACCPA) submitted a Financial Sustainability Issues Paper highlighting a number of funding issues and solutions within the aged care sector. This included renewed calls for wealthier older people to pay more for aged care under means testing measures, plus increased Government-funded revenue through higher taxation and an aged care levy, similar to the existing Medicare levy.

Although the solutions would require a reasonable amount of change to legislation, it appears the Government is interested in exploring how the superannuation system can be used to strengthen aged care funding.

The Assistant Treasurer, Stephen Jones, said there should be national conversations about how superannuation can be used to better support people in retirement, rather than being left to inheritance. 

“There will always be bequests in the system. No doubt about that. [But] it’s not the purpose of superannuation to have a tax-preferred estate-planning mechanism. It’s for providing for people in their retirement,” Mr Jones said 

“We’ve got a crisis of funding in aged care. At the same time we have one-third of the value of funds being written out in bequests. That doesn’t square… It’s a conversation that we need to have.”

Under ACCPA’s submission, additional superannuation contributions could be set aside for aged care, meaning they would not cut into existing savings. Voluntary contributions could also be made for those who want to set aside money for later in life. However, they acknowledged that older Australians are reluctant to use their superannuation balance for aged care, preferring to build capital and save money through tax concessions. 

With plenty more to be fleshed out regarding potential intricate details, ACCPA Chief Executive Officer (CEO) Tom Symondson told the Sydney Morning Herald that the Aged Care Taskforce – which he is a part of – hopes to see more conversations about the move. 

“This is the first generation that is retiring with everybody having had the benefit of at least being in super for a while. This is the first generation where everybody has at least had the opportunity to be in a compulsory super system. I think it warrants a reset,” Mr Symondson said.

The use of superannuation for aged care services does have its critics, however, with The Greens attacking the idea of user contributions as a solution. They believe the Government should be responsible for increased funding.

Meanwhile, National Seniors Australia Chief Advocate, Ian Henschke, said he did not believe superannuation would actually provide enough funds as others anticipated. Instead, he would like to see a short-term focus on fixing the aged care system to provide users with increased transparency before conversations on super are held.

“Aged-care providers must demonstrate full financial transparency and we haven’t got that at the moment. We found out years ago that some multinational providers aren’t paying any tax here in Australia, even though they’re making profits because of elaborate structures,” Mr Henschke told The New Daily

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  1. Aged care is a business . This policy approach has taken precedence over quality and safety of those aged care recipients who increasingly are older and requiring experienced clinical nursing needs because of associated co mirbiditeswith or without disabilities.
    The system is completely provider centric .which is supported by provider organisations including so called non for profits. The money both spent by Government and by care recipients is not value for the money.
    Time for audits to see just how much money is and has been fleeced in this business.

    Aged care recipients are treated just as customers and consumers rather than care recipients many of which require quality experience nursing and medical care as well as care and assistance with basis living needs.
    Where has this business model been subjected to open and transparent audits of who and where the funding and money paid to them in form of RAD and extra daily fees charged for so called extras that not requested or delivered. Who has ever looked at that agreememebts contracts that Care recipients and their families are required to sign jhat are drafted by the lawyers for the providers . aged care is nothing now than a business incentive for providers to make money and I have read that providers get registered when the pay for their right to become a provider!!

    What a business. No complaints system exists to for any accountability for aged care and all the associated highly paid interests of all those organisations that are only self centred and not aged care recipient centered
    Aged care recipients are treated as customers and consumer no protection as consumers however Picy reset before more money to providers

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