Younger Aussies to be eligible for downsizer super scheme, Morrison promises


The Morrison government has said it will expand the downsizer superannuation scheme by reducing the minimum eligibility age if re-elected this weekend.

At present, the downsizer superannuation scheme is only available to those aged 65 years and over. In the 2021 Federal Budget it was announced that the eligibility age would be reduced to 60 from July 1.

Now, if re-elected, the Morrison government has said it will reduce the eligibility age further to 55.

super downsizer contribution expanded morrison election

Australians approaching retirement would then be able to make a post-tax contribution of up to $300,000 into their superannuation account after they sell their family home.

While the eligibility age is proposed to change, there are several other criteria that must be met that remains in place, including that the house must have been owned by a person or their partner for at least 10 years.

In response, UniSuper said it supports any measures aimed at helping people make the most of their retirement savings.

"The decision to downsize is one that is often made earlier in life than the current eligibility age. This proposal removes a key barrier for people in their 50s and early 60s who are ineligible for downsizer contributions," says UniSuper chief executive Peter Chun.

"Pre-retirees who wish to downsize as children finish education and move out of home shouldn't be penalised.

"Downsizer contributions offer genuine flexibility to people who don't need larger family homes. They can contribute the proceeds from the sale into super, outside the usual contribution caps.

"We welcome the additional flexibility this offers to our members, and the related changes to the exemption of principal home sale proceeds for a further 12 months, which gives both the additional time and flexibility to save for their retirement."

The government said it will also make proceeds of the sale of a home exempt from the pension assets test for two years; currently, the exemption applies for just one year. This would be implemented from January 1, 2023.

This article first appeared on Financial Standard

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Jamie Williamson is editor of Financial Standard. Prior to this she was a senior journalist, covering wealth management including financial advice, superannuation and life insurance. Before turning to journalism, she worked in public relations, specialising in financial services. She has a Bachelor's degree in communications from the University of Newcastle.
Andrew Bu
May 18, 2022 4.49pm

With reference to the $300,000 downsizing contribution, I am sure this policy is very much welcomed by those who qualify. But it seems to me that there are unintended effects in its implementation, as follows:

Let's say, for example, an older retired couple sells a large house for a large price and buys a small house for a much smaller price, leaving at least $300,000 in hand to take advantage of the policy. Although this releases a large house for somebody to buy, it would likely be of no interest to a first home buyer because of the high price. Conversely, the cashed up older couple would be competing with the first home buyer for the smaller cheaper house, thus tending to force up prices at the lower end of the market. I can't really see any winners there.

One aspect of the $300,000 downsizing contribution policy that almost never gets a mention is that the main barrier to qualification is the requirement for the house being sold to have been owned for at least 10 years. Since the average ownership of residential properties is around seven years, this limitation makes no sense, other than as a deliberate tool to ensure very few can qualify. In my view, a 5-year rule would be more appropriate and would be sufficient to deter anyone from buying and quickly reselling to take advantage of the downsizing policy.

May 18, 2022 7.25pm

Its true, a first home buyer may not be interested in the larger home but it would be a trickle down affect as homeowners move on.

I agree with the 5 years.

Phil Maxwell
November 10, 2022 11.43am

No mention of where an 'eligible person' may just own multiple properties for 10 years - and lived in more than one of them. Ultimately - the intent is to free up smaller affordable properties is it not? Why not extend to the sale of investment properties that have been retained a long time?