In his explosive expose’ on Australia’s compulsory superannuation system (here and here), Dr Cameron Murray argued that superannuation is not a genuine retirement policy because, among other things, it can be with withdrawn well before the official retirement age of 66 (rising to 67):
Among other things, super can be spent many years before retirement, beginning anywhere from age 55 to 60, even though the retirement age specified the pension legislation is 66 to 67…
Superannuants can withdraw their money eight years earlier than the age pension, in their mid-50s. Indeed, at age 60, superannuants can remove all their superannuation balance and spend it on consumption goods immediately. Details like these (and others[4]) show that superannuation is not a retirement income system…
Many financial planners advise intending retirees to spend a lot of their super quickly in order to shelter it in income-test-exempt assets such as housing and qualify for the pension…
Today, a new report published in the Herald-Sun further highlighted Dr Murray’s claim, revealing that tens-of-thousands of Australians are attempting to access their superannuation even earlier:
The number of cash-strapped Australians accessing their superannuation early to pay for medical expenses such as weight-loss surgery or IVF and to meet mortgage repayments has soared, alarming new figures have showed.
New statistics from the Australian Taxation Office found between from July through to December last year there were more than 34,400 applications for early access to super based on compassionate grounds.
Of these 58 per cent were successful, allowing Australians to tap into $292.4 million of their retirement savings.
The average amount accessed was $15,200.
This rose 11.7 per cent from 30,800 applications in the six months prior from January to June 2019 and of these 57 per cent of applications got the green light.
As a result Australians accessed $259.4 million early.
While the numbers here are obviously relatively small in the overall scheme of things, how can anyone genuinely call superannuation a retirement pillar when it legally allows one to withdraw all of their savings tax-free, and spend it as they see fit, a full six years (soon to become seven) before the eligibility age allowing access to the Aged Pension?
