Controversial measure sees $36 billion 'sucked' from superannuation

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The controversial coronavirus measure allowing pandemic-affected Australians early access to retirement savings ended on New Year’s Day.

Around 3.4 million Australians ‘sucked’ close to $36 billion from their nest eggs in a bid to stay afloat during the pandemic.

And while that figure may seem large, it’s still below Treasury estimates by around $3 billion.

Implemented in the second COVID-19 economic stimulus package, the early access scheme aimed to help Australians suffering financial hardship caused by the pandemic, allowing them to access $10,000 from their super in the 2019/2020 financial year, and a further $10,000 in the next financial year.

The scheme ended on 1 January..

According to an ABC report, Treasury initially estimated $29.5 billion would be accessed prior to extending the scheme to the end of 2020.

By the end of June 2020, more than $20 billion had been withdrawn, prompting Treasury’s $42 billion estimation at the end of 2020.

Use of the scheme slowed in the second half of the year as states returned to some normalcy.

Once the early access scheme was made available, it didn’t take long for people to dig in. An ABC report in September revealed that more than a quarter of people who accessed superannuation early made their decision within a day.

Some say those who took advantage of the scheme to meet short-term financial needs will suffer in the long run, having sacrificed long-term compound interest on their balance.

And there were those who may have defrauded the scheme.

Only those who were unemployed, eligible for some welfare payments or had their hours or sole trade income reduced by 20 per cent were eligible to access the scheme.

That didn’t stop others who were not eligible from accessing to their super balances.

“The ATO understands that some applicants may have made a genuine mistake,” said an ATO spokesperson.

“In this instance, the ATO will work with them to help resolve their position.

“Only in serious cases where an applicant has deliberately applied knowing they were not eligible will the ATO apply penalties.”

If it turns out an ineligible applicant has raided their savings, the tax office will deem the amount withdrawn as assessable income.

The Sydney Morning Herald says pressure is mounting on the federal government to review some of the economic policies introduced during the pandemic, including giving workers access to $20,000 from their retirement funds.

Senator Gerard Rennick wants to keep the early access super scheme permanently. So, too, do Liberal MPs Dave Sharma and Tim Wilson, both claiming that the scheme had been “enormously successful”.

Mr Wilson wants a new, permanent early access scheme to let first-time buyers use their retirement savings to buy a home.

His tweets on that topic last week attracted criticism.

“Aiming to buy a first home and struggling to save the deposit?” he tweeted.

“For 4 more days you may be able to access your super savings now to bring a purchase forward: earlier & cheaper.”

Treasurer Josh Frydenberg said in March 2020 that the measure would “allow those Australians in financial stress as a result of the coronavirus to access more of their own money in superannuation”, but maintains that the early access to superannuation, JobKeeper and the JobSeeker supplement were only ever temporary programs.

“Our economic recovery plan is designed to rebuild our economy and we’re seeing that through the creation of 734,000 jobs in the last six months, with fewer businesses and their employees in need of JobKeeper and other temporary economic support,” he said.

Early access to super may still be granted in extreme cases such as being unemployed for six months and being unable to meet living expenses.

Do you think we should be able to access our super whenever we need it? How do you rate the federal government’s economic policies during the pandemic?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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13 Comments

Total Comments: 13
  1. 1
    3

    More panic policy from Morrison, this man seems intent on wrecking our superannuation system as we know it in Australia.Most of the money taken out was just wasted.

  2. 2
    0

    OMG, as usual, generalisations from floss whose only aim in life appears to be attacking the Coalition at every opportunity. I note that nothing has been provided to support the statement “Most of the money taken out was just wasted”.

  3. 2
    0

    “Do you think we should be able to access our super whenever we need it? How do you rate the federal government’s economic policies during the pandemic?”

    No, I don’t believe that super should be withdrawn before retirement in normal times but these are hardly normal times. The pandemic has caused a much higher rate of unemployment than normal and if we don’t allow some withdrawals from super we could be denying people the ability to put food on the table and pay mortgages or rent to keep the family home.

    I note that $36M has been withdrawn from super funds and whilst this appears to be a large sum, to put it into perspective it is just over 1% of the total funds held in super. Keating’s original super scheme was to provide for a more comfortable retirement, not to be used as a savings bank to be withdrawn at a whim.

  4. 2
    0

    I am glad you aded the last point.
    However the amount taken from super funds is one thousand times larger than your figure of $36Million. The actual figure is approximately $36 Billion., that’s $36,000,000,000. Perhaps a typo.
    Either way, it’s a shame that the Federal Government has “allowed” some people to withdraw some of their super , taking the place of Government handouts. AKA the recovery is helped by those that can least afford it.

  5. 2
    0

    “Do you think we should be able to access our super whenever we need it?

    Absolutely not. This is the problem that allowing the $10,000 x 2 during the height of the pandemic has reopened the door to those whining about forced savings for retirement. Where will it end? First a home deposit, then the kids school fees, next a holiday and on it goes.

    There were and remains facility for genuine hardship payments from super but they are rightly difficult to access particularly on a whim. If people want a slush fund then they need to create one for themselves not access money legally put aside for retirement.

    Of course those wanting to take money now have no thought of the future. It goes with the I want what I want and I want it now attitude that has become so prevalent. This emergency access to super was only ever a one-off deal. It was made very clear that it was a temporary arrangement. Where it fell down was that there were no checks before demands were met and money released. It is only now that the ATO is catching up. No doubt there will be more tears before morning as those that did the wrong thing are found and have to pay the penalty.

    For others their tears will come in 20, 30 40 years time when they are short on super and then want to rely on an age pension (assuming there is one to get), unless they repay the money which is exactly what the ‘ experts’ are advising now.

  6. 0
    0

    I know a guy who a few years ago withdrew part of his super under severe financial hardship otherwise, he would have lost basically everything he owned including his house and motor vehicle used for his business and people would have had to find new employment. He had to fill in several lots of forms, get copies of outstanding accounts, mortgage, records of wages he had never paid himself or another family member.

  7. 0
    0

    There has always been access to super for genuine hardship. The current government made an ideological decision to damage one of the best systems in the world. In my opinion it’s their intention to continually undermine the population’s confidence in superannuation (industry funds in particular) in order to weaken and if possible destroy it.

    They and their financial backers are unable to accept that super funds are good for their members and the country

  8. 1
    0

    Early access to super for first home purchases will result in only one thing – increased house prices.
    This has already happened with the Homebuilder grant. I signed a new build contract in the latter half of June last year (my retirement home). It didn’t affect me, but around the middle of July my builder increased new build prices by 3%. The building industry (land developers and builders) are ruthless when presented with opportunities to raise their prices.

  9. 0
    1

    HC when your brain matches your mouth then you can pass judgement on others but that will be a long way off. If you where not such a rusted on member of the greed is good gang i would be offended.

  10. 0
    0

    The article assumes that compounded interest is received on superannuation. This only occurs if the investment is in term deposit products. Return in these is currently modest so many people are investigating in the riskier share portfolios. Shares can deliver negative returns just as easily as positive so returns are not guaranteed to be positive.


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