More than one million Aussies are set for a super shock: poll

The government’s early access to super scheme could be weighed down by ineligible claims.

A million Aussies set for super shock

New polling shows that more than one million people who have not been financially affected by the coronavirus shutdowns are intending to access their superannuation early.

A UMR survey conducted in the first two weeks of April, commissioned by Industry Super Australia (ISA), shows as many as 40 per cent of applicants may not satisfy the eligibility criteria for early access to super.

This high number of ineligible claimants would not only undermine the policy intent of the scheme but could slow down the processing of applications for those who urgently need financial support.

To qualify for the government’s early release of super, claimants must be eligible for a qualifying social security benefit, have lost their job, or had a reduction of hours. If they are a sole trader, they must have suffered a 20 per cent reduction or more to their regular turnover.

About 30 per cent of the 1100 people polled, who were under 65 with a super balance, said they were either very likely or likely to take up the scheme. On average they said they would take out about $13,500 each – the scheme allows for $10,000 now and another $10,000 after 1 July.

But worryingly 40 per cent of those who said they intended to make a claim were not yet financially affected by the coronavirus shutdown.

Of those very likely to claim, 46 per cent said they were still in paid work and their hours had not been reduced due to the COVID-19 economic shutdown. Forty per cent of those very likely to take up the scheme are in households that earn more than $104,000 a year. And 29 per cent of those very likely to claim said they were worried their job might be affected at some point, indicating they wanted to access the scheme to build up a savings buffer.

Treasury has estimated 1.5 million will take out $27 billion from super but the polling and other ISA analysis suggests the take-up could be far higher – in excess of $40 billion.

Industry Super chief executive Bernie Dean believes that the results should prompt urgent action by relevant regulators, including the announcement of random checks on claims to deter inappropriate applications and real-time monitoring of claim volumes.

He also said that the ATO should continue to issue clear warnings that anyone flouting eligibility rules could be penalised.

“It is important that those that need to access their super can do so quickly, without being caught behind an administrative logjam of ineligible claimants,” Mr Dean explained.

“The Australian Tax Office has assured us there is a robust compliance regime in place and those who deliberately flout the rules could face severe penalties.

“It is tempting to tap into your super early, some may want to do so as a savings buffer, but nothing in life is for free and cracking open your nest egg comes at steep cost – it should be treated as a last resort.”

Are you worried about what will happen if too many people try to access their superannuation early?

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    COMMENTS

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    thommo
    22nd Apr 2020
    10:17am
    maybe a lot of people with low balances want to draw it out before it disappears,the value is going down at a fast rate,better in the bank than lose it all!!
    leek
    22nd Apr 2020
    10:22am
    Agree. My 23yo tells me that she is going to draw some out, just before she got the job seeker payment. I hope she is on top of things now and has changed her mind. I have been helping her out with some bills, but the little bugger wants to be independant and not ask for help. I would rather help her than her take money out of her super.
    Tanker
    22nd Apr 2020
    10:30am
    It is a fallacy to think that drawing money out of super now and putting it in the bank will preserve its value. Drawing money out now will in fact realise the "loss" in value. The value in super will recover as the economy picks up and al it requires is patience.
    Tanker
    22nd Apr 2020
    10:30am
    It is a fallacy to think that drawing money out of super now and putting it in the bank will preserve its value. Drawing money out now will in fact realise the "loss" in value. The value in super will recover as the economy picks up and al it requires is patience.
    john
    22nd Apr 2020
    11:04am
    Drawing on super funds too early is a disaster waiting to happen in the future. If you have been lucky enough to set yourself up with a self funded super that pays regularly , to me that means you have the where with all to sit this out.

    Unless you are in some dire situation , which may have happened anyway.

    If you are a pensioner or part pensioner and you have arrangements of your own and you own your home, then drawing off your super, which will be not that huge, at the moment is the most ridiculous thing people could ever do. ( it'll come back)

    People who are totally reliant on the government will be looked after.

    I believe that economies worldwide will come back and more co-operation amongst nations, may happen, doomsday sayers are fools, and so are the economists that keep slamming the negative around like a football.

    We've lived pretty easy in this modern world and a when very serious threat comes up, and news media like the TND/ABC start writing lists of the ten things that'll wipe out the world.
    Well you have to take stock, we've had WW1 and WW2 and a third world war since 1947/8 the black plague was supposed to finish us? As bad as this is we'll get through with some positivity???

    The fact that a 10% drop in our economic growth is bandied about, quite amazes a layman like me , I thought we'd be looking at 80% drop off in everything, so my disaster monitor is way out of whack. Economists are the panackers!

    You simply have to wait.

    Wait the disaster out , (as I said unless you are in dire straights) you, if you are totally self-funded in retirement to me that means you should be well off enough, to be able to survive a downturn.
    You may have to have... "just enough"...for a while, to get through this.

    Change lifestyle for a bit?????
    Rod63
    26th Apr 2020
    11:50am
    But it's not going down "at a fast rate" or any other rate. It went down until 23 March but has started to recover.
    Taking it out now is very bad timing!
    Mariner
    22nd Apr 2020
    10:21am
    Over 60 you do need to qualify for super withdrawal unless that too has changed since I accessed mine 10 years ago. Took mine out during the GFC.
    leek
    22nd Apr 2020
    10:24am
    over 60 still has conditions. There are no conditions for over 65.
    Horace Cope
    22nd Apr 2020
    10:41am
    "Are you worried about what will happen if too many people try to access their superannuation early?"

    No. If all of the people that this article suggests withdraw the maximum amount allowed under the emergency regulations, it will be about 0.66% of the amount held in super funds Australia wide. A lot of money when shown as an amount but a very small proportion of the overall amount when shown as a percentage.
    Bakka
    22nd Apr 2020
    10:50am
    Can just picture the scene when this is all over and many look at their supposed future retirement super accounts..and then seek someone else to blame for the reduced balance.
    They will not want to remember that it was their own decision...no one elses.
    Comment not directed at those in genuine need.
    Ronin
    22nd Apr 2020
    11:03am
    If you have debts, rather withdraw from Super and pay them off. If you have a mortgage use the money to pay it down. Paying down your home mortgage is equivalent to a pre-tax return of around 4.5 to 5% risk free( depending on your mortgage rate and marginal tax rate). It will be hard to get that risk free return in Super going foreard.
    floss
    22nd Apr 2020
    11:18am
    This was always going to be a disaster.It could only be called Panic Policy at best and badly thought out.
    Horace Cope
    22nd Apr 2020
    11:40am
    So, floss, when people have been put out of work, have run out of money for food and shelter, are ineligible for any assistance in the short term and their super fund has enough to help them get by, tell us what policy you would have thought out. We're sure that your ideas will be well thought out, practical and workable.
    Priscilla
    22nd Apr 2020
    11:52am
    Too scared to take it out, too scared to leave it in? Can see the balance getting lower and lower but the option to put it in the bank is even more frightening so will cross my fingers and say a prayer that there is something there when this is over.
    mike
    22nd Apr 2020
    12:18pm
    Well, as a recent self funded retiree who has all the major bank shares, have watched the share price go down over 50%. Question DOES THE GOV WANT TO DESTROY OUR BANKS. It is our banks that saved Australia from the last world recession. Since then the gov forced the banks to increase the amount kept on hand by a huge amount. Then huge multi billion fines for some questionable money laundering that the banks wernt even responsible for. Then no income from mortgages, no income from new Zealand investments. Yet the bloody gov is determined to fine the banks millions and finish them off. Mr Bloody Morrison, dont you realise the bank shareholders are self funded retirees who depend on the banks for their retirement income . Mr Bloody Morrison, why are you determined to finish of our banks, is it a directive from the World Bank?
    Lookfar
    22nd Apr 2020
    1:56pm
    Mike, possibly the Banks are upset that the Govt. is printing money when the banks used to be the only ones that could.
    Well, tough luck to them, - you don't see the banks giving out stimulus money or paying wages etc.
    And I would not be too quick to forgive them their wrong-doing, - they got away with murder all across the board. - surely you can invest in something more moral?
    Mariner
    22nd Apr 2020
    2:41pm
    Investing in something more moral does not pay dividends as much as the banks do. When you are a SFR you go for the best returns otherwise you might be called a fool. Of course you can be moral and get a part pension.
    Buggsie
    22nd Apr 2020
    12:47pm
    Mike, I am a self funded retiree and I am elated at the current cost of bank and other shares as I have some money available due to maturing bank term deposits. The government is not responsible for the current downturn in the market, Morrison will just become the scapegoat for what's happening. No, I am not a liberal voter but Morrison is doing his best to contain the health problem behind all of our woes and I doubt that anyone else could do much better. My small existing share portfolio has lost money but not selling now should see a future recovery. In the meantime, shares bought now should show a short term very welcome capital gain, but don't depend on bank shares to pay similar dividends to last year - as far as I am concerned anything over 3% will be a bonus. One person's loss is another's gain! Good luck.
    Chris B T
    22nd Apr 2020
    2:23pm
    The last Crisis "GFC" Super funds went negative then recovered after time no Major Unemployment Shock and no early access to Funds tax free like now.
    This is a Event never been encountered before, there are no rules or indicators going forward.
    How long this going to be before some Normality comes back to the Economy, while unemployed there are no funds going into super. Funds going out all at once on a scale never been before.(Early Access $10k now then $10k 1 July allowed)
    Share/property portfolios, managed funds and cash that super has on your behalf is all over the place for now.
    Hope for a outcome/funds that you had before this mess are available and value.
    Blossom
    22nd Apr 2020
    3:36pm
    If you are claiming payment because of financial hardship be prepared that you may have to fill more than one set of forms unless they have changed it because of CORVID19. I know somebody who was in debt because a customer he had done jobs for owed him in excess of $12000.00. It is a lot of money when you are self employed, you have a loan on your large work vehicle, a house mortgage etc.
    Jimbo
    22nd Apr 2020
    4:00pm
    Allowing people to access their Super early in 2 batches of 10k undermines everything we have been conditioned to believe aboat the role Super was supposed to play in our retirement. The government has made a major mistake. To access early Super involves answering a simple series of self assessment questions to see if you qualify. There is no checking over the veracity of the reasons given and the Super fund has 5 days to process this 'emergency 'withdrawal.
    Why so early in this crisis did the government feel it necessary to introduce this policy? Already most young people give little or no thought to Super except knowing it's locked away into the distant future that they rarely think aboat. Now suddenly with the markets falling and their balances reduced the government gives this ridiculous go ahead to withdraw their Super thus locking in all these losses. Of course huge numbers of younger people will take this opportunity to grab it while they can. This massive withdrawal,possibly up to 40 billion,will in itself threaten the the very funds themselves.
    This was a massive overreaction by a conservative government punch drunk in its response totally unnecessary and foolhardy.
    panos
    22nd Apr 2020
    4:34pm
    Geesus the only people I see panicking here are the Fund Managers, that might miss out on their juicy bonuses if everyone starts taking money out...

    No one else is panicking but them and I see a few of you moneyed retirees who are not on the full pension only........


    Makes me laugh
    BERRYUPSET
    22nd Apr 2020
    7:09pm
    Even a little bit under the mattress (just in case )UMYA UMYA UMYA!
    KSS
    22nd Apr 2020
    7:45pm
    Whenever there is a system there will be those out to rort it. This is no different. I wonder how many big screen TVs will be bought?
    Mariner
    22nd Apr 2020
    8:35pm
    Nothing wrong with them, KSS. Got one myself, eye sight is no longer as good as it once was, also the price is no longer exorbitant. We had a B&W set al the way to 1985. House payments came first.
    old frt
    24th Apr 2020
    8:12am
    Lookfar you are a moron ! When did banks ever print money ?
    Mariner
    26th Apr 2020
    10:39am
    They did in Northern Ireland, 4 different banks with different notes but all the same value in Pound Sterling. Confused me the first time when over there on a visit. Come to think of it Hong Kong seems to have a similar system with the Bank of China, Standard Bank and Barclays printing notes but all in $HK value.
    BillW41
    26th Apr 2020
    2:00pm
    As a retired banker of 34 years' experience, my advice would be to draw on your mortgage rather than bite into super. It'll be financially better in the longrun. For retirees, take advantage of the temporary reduction in compulsory annual withdrawal from annuities to half what you're currently receiving, thereby helping to preserve the capital value. Re-budget and grin and bear it until 30/6/21.
    Gra
    26th Apr 2020
    2:25pm
    Those pulling money out of their super wll surely live to regret it.


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