Via the ABC:
Desperate times have seen many Australians raid their superannuation accounts to the tune of the maximum $20,000 early withdrawal since the coronavirus pandemic struck.
Sam Espie lost his financial services job in March when the COVID-19 shutdowns hit home.
The business he worked for did not qualify for JobKeeper so, naturally, he began to worry about his finances.
He chose to draw down $10,000 from his super under the Government’s early withdrawal scheme.
“My concern was that if things got as bad as they felt like it would that the balance sheet would be empty and there’d be no cash,” he explained to PM.
Fast forward five months and Sam Espie is still out of work.
Fearing another lockdown in New South Wales, he’s drawn down a further $10,000, made possible by the start of the new financial year.
“[I] took out the next $10,000 last week,” Mr Espie said.
“We’ve spent some on bills that we’d pushed out and were outstanding.
Sam Espie is one of millions of Australians who are taking advantage of the Federal Government’s early super release program.
Banking regulator APRA’s weekly update on early superannuation access shows, since the pandemic struck, 2.7 million accounts have been drawn down.
Opposition spokesman for financial services Stephen Jones said he has been told that over just four days last week, one fund had 50,000 early withdrawal applications.
Industry super fund HESTA has confirmed to PM it had more than 47,000 withdrawal applications in the first two weeks of July.
Mr Jones warned there is now a run on superannuation, with roughly 500,000 Australians completely clearing out their accounts.
“I think we’ve had a significant run, well in excess of [the $29 billion] the Government anticipated,” he said.
“That’s of great concern.”
Assistant Minister for Superannuation and Financial Services Jane Hume told PM that the Tax Office has so-far approved almost $30 billion of super withdrawals.
However, she pointed out that is only a fraction of the roughly $3 trillion Australian superannuation pool.
She also labelled Stephen Jones’ call of a “run” on superannuation accounts “irresponsible”.
“In fact, it’s incredibly disappointing that in a time of financial crisis that sort of intemperate language is used,” Ms Hume responded.
Super withdrawals could reduce infrastructure investment
Whatever you call it, tens of billions of dollars have been drained from the superannuation industry.
The government relies heavily on the industry to help fund major infrastructure projects.
Equity Economics’ lead economist Angela Jackson said early super withdrawal throws a spanner in the works for both super funds and the Government’s economic plans.
“In terms of the reserves of the super funds, obviously they’re not going to be tapping into long-term investments at this point,” she said.
“They’re going to be tapping into cash reserves and short-term investments, money that would have been available to make those long-term investments that involve, generally, partnering with the Government on big infrastructure projects.
“They won’t have those funds, or as much available, over the next period.”
Senator Hume said the Government’s infrastructure plans will not be affected, even if more Australians than expected withdraw their super early.
“Only a couple of weeks ago, CBUS chairman Steve Bracks was announcing a strategy to create over 100,000 jobs, along with other industry funds,” she observed.
“Around $19.5 billion was announced to be invested in infrastructure from industry funds over the next three years.
As for concerns those drawing down their super will either have nothing, or very little, to retire on, Sam Espie had more pressing immediate concerns.
“With two small children in the house, to me, I was ranking that above all of those other things,” he said.
“I placed a higher price on the peace of mind at night knowing there are resources there.”
Chief executive of lobby group Industry Super Australia Bernie Dean said industry funds remain “very well placed” to meet the demands of the Government’s early release super scheme.
That’s s a lot of economic support brought forward.