No industry superannuation fund withdrawals for you!

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The Morrison Government has advised that 1.2 million people have now applied to withdraw a total of nearly $10 billion from their superannuation fund via its early access scheme:

As of late Wednesday, 1.19 million Australians had applied for the early release of $9.8 billion, according to Treasury figures…

Treasury has forecast that about $30 billion is likely to be withdrawn under the scheme

As expected, industry superannuation funds operating in areas hardest hit by the COVID-19 shutdown have been worst affected, with some funds already suffering withdrawals of between 5% to 10% of funds under management:

Australia’s largest fund, the $185 billion AustralianSuper, has already paid out over $1 billion in early release to more than 140,000 members…

Hostplus’ early release numbers were also creeping towards $1 billion this week. The fund had paid over 140,000 members $970 million as at end of day Tuesday, May 5…

Sunsuper, as the default super fund for Virgin Australia, has paid out at least $784 million to 108,000 members as at last Friday…

Rest, which has approximately $60 billion in member funds, has paid out 100,385 members about $693.4 million… Rest said there is still 15,184 applications worth over $100 million to be processed… Rest would typically receive about 100 applications per week. In the first week of the new early release scheme, it received around 65,000 applications…

Media Super, is smaller than many other funds with just $6.3 billion in funds under management. It has already paid out $30.9 million to more than 3,500 members.

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Unemployment projections from the Grattan Institute suggest that younger workers operating in hospitality, recreation and retail will be among the hardest hit by the COVID-19 shutdown:

Thus, industry super funds operating in these areas will likely experience further heavy withdrawals. Or not, if you can exploit a convenient fraud scandal, at the AFR:

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Australians will be blocked from early access to superannuation savings until at least Monday as federal police investigate up to 150 fraudulent withdrawals.

A day after AFP boss Reece Kershaw told Parliament that $120,000 in retirement savings had been accessed in an alleged fraud of the COVID-19 financial hardship scheme, Assistant Treasurer Michael Sukkar said new applications would be paused “out of an abundance of caution”.

The one business day pause comes after a series of bank accounts were frozen and search warrants issued in what Mr Kershaw said was a “sophisticated” breach that could be linked to organised crime or overseas criminal syndicates.

No industry superannuation withdrawal for you!

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.