Retirement
Early access to super: A band-aid fix for a bigger issue?
More government support is needed to help financially distressed Australians, as forecasts for the early access to super scheme blow out to more than 150 per cent of initial estimates.
Early access to super: A band-aid fix for a bigger issue?
More government support is needed to help financially distressed Australians, as forecasts for the early access to super scheme blow out to more than 150 per cent of initial estimates.
According to the Australian Institute of Superannuation Trustees (AIST), the newest forecasts prove the government must do more to help those suffering financial hardship.
AIST CEO Eva Scheerlinck has explained that the fact so many Australians are expected to access their super suggests that “cohorts of people” are in desperate financial need and are missing out on other government support measures, like JobKeeper or JobSeeker.
“Initial government estimates of $27 billion of super being accessed have now been increased by more than 150 per cent which indicates that too many working Australians are in financial distress and unable to access sufficient government support,” she commented.
Even the $30 billion that has already been withdrawn to date will “have long-lasting consequences for low-income earners and women, in particular”, Ms Scheerlinck added.
“We understand that a great many Australians have had no choice but to rely on their super to get them through the COVID crisis, but the harsh reality is that low-income earners and women, who were already facing a retirement savings shortfall, would be hit hard by this scheme.”
The CEO added: “We know that many young women now have a zero balance in their super fund which will only exacerbate the gender super savings gap that sees many more women retire in poverty.”
The AIST has highlighted that for a 25-year-old, the cost of accessing just $20,000 from their superannuation could cost them upwards of $60,000 in retirement.
It’s one of the reasons the government needs to consider alternative income support for people in financial need due to the COVID crisis, according to the CEO.
She noted that “the COVID early release scheme is an income support system that is very expensive for individuals and cheap for the government”.
“It really should be the other way round,” Ms Scheerlinck said.
She added that global interest rates being close to zero means “the government is well positioned to borrow money that could be used to assist Australians who are struggling”.
“Meanwhile, ordinary workers are being forced to withdraw super savings that could be delivering them at least 5–7 per cent in annual interest over the long term.”
The AIST is pushing to ensure the legislated increase in the superannuation guarantee to 12 per cent still goes ahead, noting it would be critical to help boost the retirement savings of working Australians who had accessed super through the COVID scheme.
Ms Scheerlinck is also calling for additional targeted policy measures to help address the COVID super gap.
“It’s now more important than ever that we increase the compulsory super rate so that vulnerable Australians with insecure work and broken work patterns have the opportunity to retire in dignity,” she said.
RELATED ARTICLES
About the author
About the author
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
