Liberal Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, appeared on Ray Hadley’s Morning Show (audio below) where she disclosed that 743,000 Australians have already registered for early release of their superannuation.
This comes after the Morrison Government last month announced that it would permit Australians experiencing financial hardship to access $20,000 from their superannuation savings, starting from 20 April.
According to Senator Hume:
“The first registrations have already been lodged to the ATO and in fact around 743,000 Australians have already registered for early release of their superannuation. And the first batch of those ATO files will be sent to the superannuation funds early next week”…
“Super funds should be able to turn them around quite quickly and hopefully get the money into the bank accounts that people have nominated within a week”.
The Australian Treasury forecast that the Morrison Government’s early release policy could result in up to $27 billion being withdrawn from superannuation accounts. By comparison, industry funds estimated early redemptions could reach up to $65 billion.
In turn, this has raised concerns that the Coalition’s early release policy could cause a liquidity squeeze for some superannuation funds, especially those with high shares of illiquid unlisted assets.
These concerns are unwarranted. As shown in the next chart, there was $2.8 billion in total superannuation savings at the end of 2019:
Even if $65 billion was withdrawn – the high end of the industry’s estimate – this would comprise less than 2.5% of total superannuation savings.
If liquidity problems do arise, this would represent gross mismanagement of liquidity by affected superannuation funds, and they need to come under investigation by APRA.
