Desperate times have seen many Australians plunder their retirement pension accounts for the maximum early withdrawal of $ 20,000 since the start of the coronavirus pandemic.
- Latest APRA Figures Show About 2.7 Million Early Retirement Payments
- Labor Party Warns There Is A “Rush” On Super Accounts, With About Half A Million People Emptying Their Balances Completely
- The government says that talking about a super “race” is alarmist and that the 30 billion dollars withdrawn represent only about 1% of total super savings
Sam Espie lost his job in financial services in March when the COVID-19 closings hit the house.
The company he worked for was not eligible for JobKeeper, so naturally he started to worry about his finances.
He chose to withdraw $ 10,000 from his super under the government’s early retirement program.
“I was afraid that if things went as badly as they wanted, the balance sheet would be empty and there would be no more money,” he told the prime minister.
Fast forward five months and Sam Espie is still out of work.
Fearing a new blockage in New South Wales, he raised an additional $ 10,000, made possible by the start of the new fiscal year.
“[I] withdrew the next $ 10,000 last week, “said Espie.
“We spent part of the invoices that we rejected and which were exceptional.
Sam Espie is one of the millions of Australians who benefit from the federal government’s first super-liberation program.
The weekly update from the banking regulatory authority APRA on access to early retirement shows that since the pandemic, 2.7 million accounts have been withdrawn.
Opposition financial services spokesman Stephen Jones said he was told that for just four days last week, a fund received 50,000 requests for early withdrawal.
The super industrial fund HESTA confirmed to PM that it had received more than 47,000 withdrawal requests during the first two weeks of July.
Jones warned that there was now a retirement pension rush, with around 500,000 Australians having completely liquidated their accounts.
“I think we had an important race, well beyond [the $29 billion] the government was anticipating, “he said.
“It is very worrying.”
Deputy Minister of Pensions and Financial Services Jane Hume told PM that the tax office has approved nearly $ 30 billion in super withdrawals so far.
However, she pointed out that this is only a fraction of the Australian retirement pension pool, which is around $ 3 trillion.
She also called Stephen Jones’ call “irresponsible” to “leak” into retirement pension accounts.
“In fact, it is extremely disappointing that in times of financial crisis this kind of intemperate language is used,” said Ms. Hume.
Super withdrawals could reduce infrastructure investment
Whatever you call it, tens of billions of dollars have been taken out of the retirement industry.
The government relies heavily on the industry to help finance major infrastructure projects.
Equity Economics chief economist Angela Jackson said the super early withdrawal throws a wrench on jobs for the government’s super funds and economic plans.
“In terms of super fund reserves, they are obviously not going to tap into long-term investments at this point,” she said.
“They will draw on cash reserves and short-term investments, the money that would have been available to make these long-term investments, which generally involve a partnership with the government on major infrastructure projects.
“They will not have these funds, or as many funds available, in the next period.”
Senator Hume said government infrastructure plans will not be affected, even if more Australians than expected withdraw their super early.
“Just a few weeks ago, the president of CBUS, Steve Bracks, announced a strategy to create more than 100,000 jobs, as well as other industry funds,” she observed.
“It has been announced that approximately $ 19.5 billion will be invested in infrastructure with industry funds over the next three years.
Regarding concerns, those who withdraw their super will have nothing, or very little, to retire, Sam Espie had more pressing immediate concerns.
“With two small children in the house, for me, I ranked that above all of these other things,” he said.
“I placed a higher price on peace of mind at night knowing that there are resources out there.”
Industry Super Australia lobby group general manager Bernie Dean said industry funds remain “very well placed” to meet the requirements of the government’s early super release program.