$17 billion ripped from Australia’s superannuation system

The Australian Prudential Regulatory Authority’s (APRA) weekly update on the Morrison Government’s early superannuation release policy reveals that another $1.2 billion was pulled from Australia’s superannuation pool, raising total withdrawals to $17.1 billion:

As you can see, 2.3 million applications for early release have been paid averaging $7,492 per withdrawal.

Looking at the breakdown, you can see that industry funds comprised the top six for withdrawals, accounting for just over half ($8.9 billion) of total early redemptions:

Under the early super release policy, another $10,000 is permitted to be withdrawn from accounts from 1 July. Accordingly, overall withdrawals could balloon.

Leith van Onselen

Comments

  1. I’ll be logging into ATO later tonight to ram raid another $10k. I’ve got to pay off a course I enrolled in earlier this year. The balance goes in mattress bank.

  2. Brett JamesMEMBER

    How dare people withdraw their own money, how will the millionaires of Australia gain massive tax write offs that cost us more than the pension if Super is exposed as a sham?
    How will the overvalued share market survive?
    Someone think of the poor fund managers charging us thousands of dollars each a year for money for jam!

  3. Those retail superannuation funds must be overjoyed as the Liberal Party continues the vandalism of the superannuation system.

    The sooner we get back to the good old days where middle management have nice super perks, private super funds make a pretty penny servicing them and everyone else lives on a miserly ration from Centrelink, the better off we will all be.

    The socialists will be happy because everyone gets the same pension administered by decent middle class folk. The conservatives will be happy because economic independence in retirement will be reserved to their kind of people.

    The sad part has been all those poor confused types who thought that giving workers early access to their super was “economic reform”.

    Real reform would be to give all Australians access to risk free deposit accounts at the RBA (just like the banks are allowed).

    Establish a retirement account for everyone and have the government make a contribution each month to each account. The funds in the account would only be available after the retirement age is reached. If you die before retirement age you lose the govt contributed balance. i.e. the kids dont get it.

    People would be permitted to make voluntary contributions but access to them would only be allowed after reaching retirement age. Voluntary contributions can be left to the kids.

    And no, the accounts will not pay interest.

    And if you are worried about people ‘blowing’ their balances on retirement you might impose some limits on how much can be withdrawn per period (week, month, year etc)

    Free retirement money – created out of thin air by the government – that you don’t get access to until retirement.

    Consider it a dividend on being an Australian.

    • drsmithyMEMBER

      Establish a retirement account for everyone and have the government make a contribution each month to each account. The funds in the account would only be available after the retirement age is reached. If you die before retirement age you lose the govt contributed balance. i.e. the kids dont get it.

      This seems pointless. Why not just a pension ?

      • drsmithy,

        If you like the idea of a Centrelink pension you can have one.

        I am sure there are plenty of people who prefer having a ration doled out to them as the government sees fit.

        I am more than happy to include an opt out option though why ANYONE would want to opt out is hard to imagine.

        What you have overlooked is that my proposal does not involve abolishing a pension.

        There would still be a need for a means tested pension …though the means testing would not include the government contributed nest egg.

        It need not be a binary choice between the current superannuation model and a pension ration welfare model from the 1950s.

        My proposal is directed to the idea that a lot of people are likely to appreciate having a “nest egg” available to them on retirement to do with as they see fit and that there is a way of doing that WITHOUT feeding a parasite army of fund managers and advisers.

        I think it is a far more equitable approach than the current system where the only people with a ‘nest egg’ on retirement are those who have had the value of their assets inflated by private bank debt as public money peddling operations or have been forced to contribute to the incomes of an army of ticket clipping fund managers.

        The fundamental reform is allowing the general public access to accounts at the RBA and ending the monopoly over central bank deposits of private banks.

        Once that is achieved the potential policy options are essentially unlimited….if you have some imagination.

        • drsmithyMEMBER

          I am sure there are plenty of people who prefer having a ration doled out to them as the government sees fit.

          You mean like this ?

          And if you are worried about people ‘blowing’ their balances on retirement you might impose some limits on how much can be withdrawn per period (week, month, year etc)

          The fundamental reform is allowing the general public access to accounts at the RBA and ending the monopoly over central bank deposits of private banks.

          Sure, but that doesn’t really answer the question of why create a “nest egg” of “regular payments from Government” that “doesn’t earn interest” as opposed to just giving people “regular payments from Government” when they actually need them (rather than decades beforehand).

        • drsmithy

          “..Sure, but that doesn’t really answer the question of why create a “nest egg” of “regular payments from Government” that “doesn’t earn interest” as opposed to just giving people “regular payments from Government” when they actually need them (rather than decades beforehand)…”

          As opposed?

          “..It need not be a binary choice between the current superannuation model and a pension ration welfare model from the 1950s…”

          Your position appears to be that a regular ration from the government is the only option that should be available to retirees.

          With the world slowly waking up to the magic of money creation and the select few who have been getting the benefits of that power under our current system, using that power to create ‘nest eggs’ for the retired beats what we have been seeing to date, QE etc .

          • drsmithyMEMBER

            Your position appears to be that a regular ration from the government is the only option that should be available to retirees.

            No, my position is IF you are going to give people a regular payment from Government, why would you do it, today, into a savings account they can’t access for decades (and which will have constraints even when it can be accessed), rather than give it to them directly decades down the track when they actually need (and can use) it ?

            In both scenarios there is a regular payment from Government.
            In both scenarios the money cannot be consumed as a single lump sum.
            Why bother with the additional complexity ? What does it achieve ?

          • Drsmithy,

            “.. In both scenarios the money cannot be consumed as a single lump sum…”

            No. I said it could be taken as a lump sum.

            “….And if you are worried about people ‘blowing’ their balances on retirement you might impose some limits on how much can be withdrawn per period (week, month, year etc)…”

            I allowed for possible “controlled withdrawals“ to satisfy middle class folk like you who don’t trust the little people with their money and prefer middle class paper shufflers to manage their lifestyles.

            I was quite prescient as your complaints are exactly what I anticipated.

            Middle class “Progressive” folk who would prefer the lower classes get nothing if they are not happy with drip fed rations from those that know best.

          • drsmithyMEMBER

            No. I said it could be taken as a lump sum.

            No, you said:

            And if you are worried about people ‘blowing’ their balances on retirement you might impose some limits on how much can be withdrawn per period (week, month, year etc)

            That’s explicitly NOT a lump sum.

            But even so, that still doesn’t explain what the reason of what seems to be an overly complex method. Even in the lump sum scenario, why not “when you hit 65 you will receive a lump sum of X times the dole/pension/median wage/whatever baseline you want”. Why the theatre of a “savings account” ? What’s the point ? Is it to give “RBA Savings Accounts” legitimacy ? Is it to put a theoretical cap on how much the pension “costs” ? Is it to put a cap on how much pension someone will receive ?

            I allowed for possible “controlled withdrawals“ to satisfy middle class folk like you who don’t trust the little people with their money and prefer middle class paper shufflers to manage their lifestyles.

            Yeah, fvck you, too.

            I was quite prescient as your complaints are exactly what I anticipated.

            Yet, we’re up to the fourth go now and you still haven’t explained the reasoning, let alone have anticipated and addressed it “presciently”. Just diverged off with straw men and ad hominem.

          • Overly complex?

            What is complex about establishing accounts at the RBA for every Australian?

            As for why would the retirement account receive an annual contribution from the government and not just a large injection on retirement? You may want to call it just a bit theatre but I think it is important that the contributions are seen as gradual increments just as any voluntary contributions are going to be gradual increments. As to the rational for those public contributions a solid justification is simply that money creation in a growing economy is a fact of life and it might as well be allocated in a democratic and fair way and retirement savings is one way of doing that.

            I appreciate that the concept of saving and consistent gradual accumulation for ones retirement is contrary to your preference of people just relying on rations from the government in their retirement but that is just your welfare state preferences showing.

          • drsmithyMEMBER

            You still haven’t answered the question, just more misdirection, straw men and ad hominem.

            I have to admit when I asked the question, I was expecting something simple and straightforward, not hundreds of words of abusive screed avoiding it.

  4. Jumping jack flash

    17 billion is chicken feed. Barely a scratch.
    The economy needs 600 billion at least, right now, at this instant in time.

    100 billion gets ripped out every year for interest on the 2.4 trillion glorious debt dollars owned by all the Quiet Australians. Mortgages of course contribute nothing to the repayment of that interest.

    Come on, use your 10/20K to take on 300/600K of debt. That’s what they should be pushing if they had any sense at all.
    Banks are insane. They’re certainly not doing themselves any favours.

  5. My guess is that the ‘second dip’ won’t be a large as the first. My assumption (with no factual reference at all!) is that punters making the withdrawals were not displaying constraint when not withdrawing for the full $10,000 but rather, withdrawing their full balance. The average withdrawal was $7492. A reasonable hypothesis is half took $10k and half took $5k. Those that took $5k have nothing left. Given that the most badly effected workers are young people in accommodation, hospitality etc where they would have low super balances backs this up. Maybe the second dip will only be $8 billion. At least the fund managers can still having their EOFY parties.

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