Industry funds pummeled by early superannuation withdrawals

The Australian Prudential Regulatory Authority (APRA) has released its weekly update on the Morrison Government’s early release policy, which reveals that another 1,650 million funds were withdrawn in the week ending 17 May, with total withdrawals topping $10.6 billion:

As shown above, just over 1.4 million applications have been paid averaging $7,322.

Looking at the fund breakdown, we can see that industry funds suffered the five biggest draw downs, with the below five funds alone accounting for half of total early superannuation withdrawals:

Separate data from the Australian Treasury shows that younger Australians have dominated superannuation withdrawals in number terms:

A third of people tapping their superannuation accounts to get through the coronavirus pandemic are under the age of 30.

…of the almost 1.4 million people to have accessed up to $10,000 of their superannuation, more than 463,000 of them were under the age of 30…

While accounting for more than half of all people accessing their super early, people under the age of 35 took out 46 per cent of the cash that has so far been distributed.

The disproportionate impact on industry funds and younger Australians makes sense given they are most exposed to areas hardest hit by COVID-19 job losses, such as Accommodation & food services, as well as Arts & Recreation:

We are likely to further heavy withdrawals given superannuants are permitted to withdraw an additional $10,000 from their funds from 1 July.

Unconventional Economist
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Comments

  1. “Tastes Like Chicken!”: Filial cannibalism – mathematical models show that when overcrowding threatens offspring survival – which often occurs due to spread of infection or competition for resources – sacrificing a few so the most can live becomes the ultimate form of tough love.

  2. Morty Mulgrew

    So would it be a good idea to get 10k out of Sunsuper now?? Ive been on the fence wether to rip it out or not?

  3. I’m actually surprised CBUS number aren’t a bit higher? Is the building industry a delayed participant?

    • darklydrawlMEMBER

      Construction is largely still working full-time – although if residential housing approvals fall off a cliff it might slow a bit.

  4. Pfh007.MEMBER

    Scott Morrison’s mates in the gouging retail funds will be very pleased with their lobbying efforts.

    Never waste a crisis.

    Starving people into raiding their super balances has worked brilliantly.

    Superannuation should only be an attractive tax lurk for upper middle class management.

    Mission accomplished.

    • Nah, pfh – people aren’t being starved into withdrawing. They’re just taking the chance to grab back what’s theirs. There is little real hardship.

      In fact, I’m pretty sure that I can now see the outline of the next housing boom c0ming through, as a class of people are being annointed the to be the next favoured group to be allowed to feast on housing:

      – he is a white collar worker, largely unaffected by the lockdown
      – she worked in a bull cr4p job, earning $200/week – just enough to pay for lunches and manicures. This has been nominally affected by the lockdown.
      – she has grabbed $20,000 out of super.
      – she has also grabbed $20,000 through JobKeeper (jobkeeper represented a large pay rise)
      – they saved another $20,000 due to inability to go to New Caledonia over the last few months
      – he might grab $20,000 out of super too, just for good measure – chances are he won’t get caught out for being ineligible
      – they will collect the $40,000 super-FHOG

      That extra $120,000 that they didn’t have 6 months ago will be able to be leveraged solidly into savilly snapping up some sweet realty.

      There should be hundreds of thousands of households like that around the country. This has the potential to be epic.

      – oh, and the interest rate is now 2% – thanks Guv (&everyone else who cheered this loosening)!

      • Lol. Turns out if you just make up numbers, you can always be right. I like the tax-free JobKeeper and the $20K on a holiday stuff especially. But guaranteed $40K FHB grant is also good.

        • I see this being lived out. Apart from Noumea. Fiji or Europe is the preferred destination.
          Other lurk is that he “employs” his wife as an office manager and he is getting $10,000 credits from the ATO to his next two BAS instalments as some sort of cash flow grant.
          So add another 20K into the mix.
          His income also dropped from 800K per annum to 450K (some is real and some is delayed billing) so he is getting JobKeeper as well as her.
          They won’t get the FHOG as they already have a house. So that bit doesn’t ring true.

          • I can believe that a man who earns _$800K_ takes $20K holidays — heck, why not, I would if I were him too.

            But it’s a bit harder to believe that hundreds of thousands of households who do not own homes do.

      • While your scenario has potential to be exploited it doesn’t have scale. Any middle types like your figment above are already fully invested in the housing market. Whatever they’ve pulled in as windfall will be eaten by credit card debt, car payments, school fees and the latest consumer fad items.

      • Pfh007.MEMBER

        Very good Peachy!

        “Starving” for a foot on the ladder to real wealth.

        Debt pumped residential asset prices!

      • Yeah, not too sure that scenario would get credit approval right now. I would say anyone with a whiff of JK on their bank statements would get a knock back. Add the ramp up in Covid panic buying and it also wouldn’t pass the bank statement test IMO. I’m sure a few will be able to do it, but I doubt most.

        • Uh, yeah, so banks are going to completely freeze out 6 million customers …because they have received a windfall…. Or is it 3.5 million?

          Whatevs, not going to happen.

      • Jumping jack flash

        Agree.

        Plus people under 30 probably reason that theres quite a number of years left to make it up.

        However super is mostly a gamble now anyway so who can really say that it is a better bet to leave the 10/20K in there where it evaporates due to whatever shock is around the corner?

        Whereas houses only ever go up and i reckon at the moment you will need at least one to avoid eating catfood past age 85. If youre relying on only the default super then catfood is all but assured.

        • I have about $60k in my Irish pension from working there for 6+ years. But I am not allowed to touch it until I’m 60+. But by that stage what will that money be worth? Will it get eaten up in management fees? The Irish Government doesn’t let you transfer to Australia because here we can claim hardship and withdraw it early. So they wish to tax it at the full rate as income.

          I’m thinking I should withdraw it now and pay full tax on it. Since in 20+ years I may have nothing left. That way I can pay down my Mortgage further or build my garage now. Screw leaving it until retirement to discover nothing is left!

          • Surely you can call up old mate Paddy in the dodgy shop in the back lane who can arrange some sort of dodgy early access thing. For a 5k-$10k fee, which would be cheaper than normal tax?

          • I vote for dream garage build. You’ll get more satisfaction/return from it long term.

          • @Peachy I wouldn’t trust a dodgy Irishman (I’m 1) haha.

            @Aaron agree. Just gotta find out who has all my money. Lots of old payslips to go through ughhh..as if when I’m retired I’d remember either!