No industry superannuation fund withdrawals for you!

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Treasury has forecast that about $30 billion is likely to be withdrawn under the scheme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

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:

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!

Unconventional Economist
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Comments

    • My question is who bears the cost? Does the super fund accept that it was their ‘systems’ that allowed the fraud to take place and ‘replace’ the customers funds, or not?

      • Without knowing the exact details………If it is a Retail/Corporate (“for profit”) fund then the shareholder is likely to bear the cost because it is likely an admin or service provider miss. However Industry Funds don’t have the shareholder concept so it is likely to be the members who bear the cost via member reserves. In saying that the member shouldn’t take a hit because the reserves should have enough money already built up over the years covered by the admin fees.

      • darklydrawlMEMBER

        I don’t have the link here, but the story I heard was the Grubbermint was warned by the Super companies that the early withdrawl process was flawed and likely to be exploited by frauduent players and criminals – but the Goverment went ahead with it anyway as they were in a hurry. If that can be proven in court it might be the taxpayers (once again) having to pony up the coin, rather than the super agencies themselves.

        Found this – not the one I read, but it covers the issues to some degree.

        https://www.afr.com/companies/financial-services/super-industry-lobbying-would-have-delayed-access-by-several-months-20200501-p54p0h

    • TailorTrashMEMBER

      Not even enough for a deposit on a sh1t Sydney house
      …..not very good fraudsters if that’s all the dosh they made off with

  1. I’ve been looking for a thread on unemployment to post this on. I guess here will do.
    I have an idea for possibly reducing unemployment somewhat when this crap is over.

    One solution I’ve advocated before, which is loosely based on the way the Germans managed the GFC is simply to reduce everyone’s hours across the board.

    The simplest way I can think of achieving this legislatively without being too draconian is to drop the hour that overtime kicks in and let businesses sort it out. Let’s say 36 hours.
    That’s a roughly 5% drop. I’d expect businesses to see the cost and respond by hiring to reduce everyone’s hours.

    Income+tax wise:
    For the 0% bracket, it’s a flat out 5% drop in income.
    For the 19% tax bracket, it’d be ~4.05% drop.
    For the 32.5% it’d be around 3.375%.
    For 37% it’d be around 3.15%

    Tough for many, but should reduce unemployment, and spread the pain, to the point where other measures could compensate (eg tax cuts, stimulus).

    It has partial precedence. Hawke introduced the 38 hour week as part of the prices and accords reform, which has been broadly but not entirely adopted.
    It can be temporary.
    I do realise that salaried employees are a weakness to this plan. They could be accounted for somehow.

    Thoughts people?

    • Sorry. This misses the forest for the trees. The real solution is to ship the 2 million scabs out.

      Anything else is just entrenching the problem.

      • Arcadia Planitia

        My thoughts too. If we are going to have a collective sacrifice, for the good of the many, we need to be 100% agreed on who is in and who is out. We have far more people in this country than can be usefully employed but yet all have to be fed, housed and medically treated. We need a mass exiting first, then sort our hours per your plan.

      • haroldusMEMBER

        My generationally rich, ALP voting, Unions Australia boosting mate doesn’t like when I call them scabs.

        He’s a good mate with a Masters in IR, but he doesn’t have any skin in the game. Whereas my bargaining and therefore ability to support family depends on supply and demand. Same as ever.

        He’s also [email protected], and gets uncomfortable when I rant about the ROP.

          • haroldusMEMBER

            What the hell are you doing reading this at 3 am?

            Religion of peace.

            and

            booma was very keen for us all to have a meet up.

          • haroldusMEMBER

            Also, I’m not totally unfamiliar with the labour movement, I have been a delegate.

    • So….the avg wage will go down accordingly across the board, x% of people will now not be able to afford the median house in syd and melb, so the house prices will come down…..
      Nah, not gunna work!

    • Reducing employment hours of employee A does not necessarily lead to additional recruitment of employee B to cover the gap. The work output expected of employee A simply intensifies to be delivered within the reduced hours.

  2. Glorious Taiwan

    Can’t they just increase the value of their unlisted assets by $120k?

  3. So someone wanted to stop a run on the super funds?

    Yeah – call centres in India scam more than this on the regular and no one cares. Scam Chinese reverse listings scam orders of magnitude more from grannies via the ASX and no one cares.

    Yeah – pull the other one.

  4. I wonder if ScoRona saw the modelling on this and it showed labor super funds would be affected the most and gave the go ahead.