Aussies rush to withdraw superannuation savings

The Australian Prudential Regulatory Authority (APRA) yesterday released data on the uptake of the Morrison Government’s emergency early superannuation withdrawal policy:

As you can see, just under $1 billion was withdrawn from Australia’s superannuation system in the week ended 5 July.

In total, just over 2.5 million people have withdrawn nearly $19.1 billion from their superannuation accounts, averaging $7,511 per withdrawal.

As shown below, the top six withdrawals have come from industry funds, which account for more than half ($9.9 billion) of the withdrawn total:

The bigger story here is that there has been a surge of withdrawal applications in the new financial year:

Under the Morrison Government’s policy, financially struggling superannuants were permitted to withdraw $10,000 from their superannuation accounts in 2019-20 and then another $10,000 in 2020-21.

As shown in the graphic above, the arrival of the new financial year has triggered a surge of withdrawal requests. $23.3 billion worth of applications were lodged in the week ended 5 July, an increase of $4.3 billion from the $19.0 billion lodged in the week ended 28 June.

Assuming the usual 94% of applications will be approved, this means there’s billions of dollars more about to flow out of Australia’s superannuation system.

Leith van Onselen

Comments

  1. And this was just covid stimulus. Wait until they let fhb’s crack open the piggy bank for actual house deposits.

  2. I took $10k last week of June and will register today for another $10k today. I haven’t yet had the reduced hours but the boss flagged it in June that we were reducing to four day week in the future. If I lose my job , my industry is ruined, I won’t find it easy to get another.

    I now see the articles that ATO will consider early release as fraud if your criteria changed/ is not satisfied.

    I mean F F S. how unsavoury will it look for the ATO to go after people who are just trying to provide some level of security for a young family. Especially considering all the other middle class welfare provided to those who are far more cunning than I. ATO Non enforcement of foreign purchases of existing dwellings.

    ATO thieving nearly $70k of me on behalf of CBA who the gubbermint lined up all the disadvantaged uni students in the 90’s lent them $3,5k a year – then doubled the amount owing to $7k and indexed it against CPI – end result money owed and paid back is multiple s of original grant.

    I’ll take a third $10k if I can.

    And more if I’m doing my bit to bring it all down.

    • MountainGuinMEMBER

      With centrelink wait periods reportedly many months long, tapping into superannuation accounts seems to be an unfortunate necessity for many.

    • China PlateMEMBER

      don’t worry mate, can’t see the ATO ramming that through, just tough talk to keep most in line.
      Besides the Libs are not fans of super and are using the current situation as a way of gaining the initiative.
      Permanent changes in relation to withdrawals on the horizon

    • Jumping jack flash

      The way i see it is super is completely and utterly inadequate to provide even an average income for the majority of Quiet Australians for the entire duration of a retirement. It requires substantial additional contributions at worst, and supplementary debt inflated assets at best, to ensure even an average income for the entire duration.

      With shock after shock to the roulette wheel super is built upon to boot. Cash super is now something that has to be specifically requested, the default option is for gambling.

      It makes absolute sense to me to grab it while its hot and use it to obtain assets that are fundamentally protected, unlike super, and that inflate with the trillions of dollars of debt as it is created and applied, unlike super.

    • I withdrew $10k from mine, but have been adding extra to it for several years. And I had intended to use the first home buyer super saver scheme to withdraw money for a house deposit when I bought, but it was too confusing to do it before settlement, so this withdrawal is easier way of doing same thing.

      So far I’ve just kept the $10k as a buffer and trying not to spend it. After I left my job I took my long service leave payment and put it direct in in my mortgage offset and I have completely adjusted all discretionary spending to $0 and only been spending on essentials.

      If I get another job soon I’ll put the $10k on the fixed portion of the Mortgage. I’m not 1 of those idiots blowing it on new cars and toys. I fully expect the economic outlook to deteriorate not improve over the next 12 months. So I’ve battened down the hatches to ride it out.

      Probably helps that I don’t qualify for JobSeeker due to partner income (only took them 4 months to evaluate that) and she’s just gone on maternity leave so our income is being cut right back.. I’m getting a taste of minimum wage. Previous income was over $200k per year. But I had contingency plans in place for a worst case scenario and I guess we have a worst case in play now.

  3. DominicMEMBER

    While many who are applying because of hardship, there are many applying just to maintain their old lifestyle — gotta keep up appearances. That X5 and Range Rover don’t pay for themselves you know. But it’s okay because the virus will pass and the world will return to its old self ….

    • Reus's largeMEMBER

      Most people that I know that have taken out the 10k have done it for a cash splash on toys, boards, bikes, pokies etc. Sure it is helping the economy but at what cost to the future?

          • If not the 30K a year earners paying tax then who is? Apparently the “rich” (trademarked and undefined) don’t pay tax.
            Dominic is correct though. The government has your back no matter what choices you make.

      • That was the whole point. Give the spendthrifts a taste and know they’ll want more. More weight behind wrecking the whole thing.

        The real laugh will be when the pension age inevitably shifts upwards again.

        • “The real laugh will be when the pension age inevitably shifts upwards again.”
          At the same time as life expectancy is falling again. Retirement is for the silent generation up to the boomers. For the rest of us? Not so much. Work until you drop – if you can find employment; starve to death otherwise.

          • Jumping jack flash

            Interesting, i hadn’t considered that, even though the post virus life expectancy would be considerably shorter.

            Super may become adequate again to fund an entire retirement! Imagine that.

          • Yep. When I say to Boomers that young people don’t realistically plan to retire, they initially think I mean as a lifestyle choice – and I let them know it’s because of economics and finance, particularly housing, meaning that we won’t be able to. They just don’t understand. They think they’ve earnt everything they have (and are thus entitled to it), and think that it’s much the same for younger people. The truth is anathema.

          • MathenomicMEMBER

            As a GenY my retirement plan is working until they tell me to leave, having a few good years, then euthanasia.

  4. Forget the Super, most of those taking it out wouldn’t have made it to 67 anyway and it’s been a boon to car dealers, Trade Tools and the like

    The real rort is with JobKeeper. Know several high worth ‘business people’ who are on it (or their spouses), despite only a minor fall or no fall at all in income. Just need a good accountant. $3000 a month for 6 months.

    One of said business people chortled ‘it’s only a rort if you’re not on it’

    I’d dob him in, but he’s prolly just exploiting the loop holes you get when policy is made on the run.

    And now they want to demonise the jobseeker crowd and remove the covid supplement. I mean the taxpayer just can’t afford to keep these folk at millionaire levels for ever /s

    • MountainGuinMEMBER

      And I can’t see the roots stopping anytime soon.
      I’m not convinced the program will wrap up in September and even if it is only extended to selected industries, I can’t see the program being updated to stop rorters in those industries and I’m sure accountants will find more loopholes

    • Has there been much reporting of this in MSM? (like there was w school halls and pink batts)
      I’m too sickened to have been looking out for it.
      Senior person at my work was laid off at the beginning of March. A contractor that had been there for more than ten years, paid thru own company setup, presumably to minimise tax all that time, salary in the 250-300k range.
      After chats with their accountant they got onto Jobkeeper! Boomer age bracket of course.
      WTAF!

  5. The point is that money isn’t being destroyed – it’s just moving from superannuation vehicle, to some other investment . Sometimes through the hands of a few different people

    If it’s being used to contribute to a house deposit or a margin loan then it might even increase M2 as it gets leveraged up

    In any case, increasing government deficits increase money supply

    We’ve got more money than ever before, chasing the same amount of assets and that’s all that matters for prices