Future generations could be left reliant on the Age Pension
Hundreds of thousands of young Australians have wiped out their retirement balances under the government’s early release of super scheme, says new analysis from Industry Super Australia (ISA).
The analysis heightens fears the scheme could lead to a future generation left reliant on the Age Pension.
ISA estimates around 395,000 people under-35 have raided their super savings, and about 480,000 Australians across all age groups could have wiped out their super, even before the second tranche opens.
ISA analysis based on ATO data on the proportions by age of those with accounts below $10,000, and Treasury statistics on the age distribution of early release shows that, on average, about 15 per cent of Australian workers have accessed their super early.
“Those early contributions are like yeast, without them you’re left with a much flatter nest egg,” said Industry Super Australia chief executive Bernie Dean.
“To have hundreds of thousands wiping their savings out mid way through their life is a tragedy waiting to happen and it will affect everyone. Every Australian deserves a good life in retirement, not just scraping by on the pension.”
While Industry Funds have supported this scheme’s intent to get cash to those in dire financial need, there have been troubling reports of super being used to gamble, buy alcohol or other types of discretionary spending.
ISA is again calling on members to only access their super as a last resort.
A 25-year-old taking out $10,000 now could have $49,000 less in retirement, a 35-year-old could lost up to $34,000 and a 45-year-old up to $23,000.
The government estimated 1.65 million would take out $27 billion from super, but already 2.1 million have taken out at least $15 billion and it appears likely demand will far surpass forecasts.
“The Prime Minister and Treasurer must stick by their promise to increase the super rate because its critical to helping these people rebuild savings they’ve wiped out, and avoid tax hikes on working people to prop up more people drawing a full pension,” said Mr Dean.