Allowing Aussies to use retirement savings to buy their first home undercuts the purpose of superannuation, the industry lobby group says.
"If you start chipping away at what the purpose of superannuation is by introducing schemes like this it could well be the thin edge of the wedge," Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said.
Under a range of budget measures the government hopes will help improve housing affordability, first-home buyers will from July be able to make up to $30,000 of voluntary contributions to superannuation, which they can then use to buy their first home.
But they will have to wait until July 1, 2018, to be able to withdraw their contributions under the scheme, along with any associated earnings.
Ms Scheerlinck said superannuation funds must pass on the cost of administering the scheme to the participating first-home buyers.
"Superannuation trustees have a really high duty of care in relation to people's retirement savings and this is something very different so it would have to be completely siloed off and paid for separately by the people using the accounts," she said.
AMP financial adviser Andrew Heaven said the government's new plan was likely to be more successful than Labor's First Home Saver's Account scheme, which was dumped due to a poor participation rate, and only offered bank interest rates.
"Under this (new) arrangement, if you're an aggressive investor you can invest in accordance with your risk profile under your super fund with the understanding that at some stage in the future you can pull $30,000 out."
The government also has a budget plan it hopes will encourage empty nesters to downsize and free up more family sized homes.
People aged over 65 can make a non-concessional contribution of up to $300,000 into their superannuation fund from the sale of their home from July 1, 2018.
They would have to have owned the home for a minimum of ten years and both members of a couple can take advantage of the measure from the same home.
Mr Heaven said the plan would particularly help people who may have run down their super balances and are looking to move into assisted or aged care facilities.
