Labor: Early super system will leave young workers $44 billion worse off
Labor says the decision to allow people to withdraw from their superannuation is ‘as dumb as the introduction of cane toads’, with modelling showing a $20,000 withdrawal at the age of 25 could leave someone $100,000 worse off in retirement.
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Young Australians who raid their super will be tens of billions of dollars worse off by the time their generation retires, new modelling reveals.
According to the Australian Taxation Office (ATO), hundreds of thousands of young people have dipped into their retirement savings as part of a federal government scheme which allows workers to take up to $10,000 from their super each financial year.
Labor opposes the scheme, arguing young workers will be robbed of the compound interest built into the system, forcing more of them onto the aged pension when they retire.
The modelling, commissioned by Labor, shows Australians who are currently under 35 will collectively be $44 billion worse off by 2052.
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Taking into account inflation and cost of living, the modelling also reveals that a 25-year-old who withdraws $20,000 will be between $80,000 and $100 0000 worse off in retirement.
A 35-year-old who withdraws $20,000 will be at least $65,000 worse off.
Labor’s shadow assistant treasurer Stephen Jones said the stimulus measure would see more Australians worse off in the long term.
“We introduced super because we had an ageing population and had a problem with pension,” he said.
“We will look back on this decision and think it was as dumb as the introduction of cane toads.”
“Somebody else is going to have to pick up the bill down the track.”
Figures from the Australian Prudential Regulation Authority (APRA) show 2.8 million Australians have applied for early access and more than $25 billion has been paid out.
Financial Services Minister Jane Hume has previously defended the stimulus measure, saying it gave struggling families the option to make a choice about their own budgets.
“People should take the decision as to whether they should access their superannuation very seriously indeed … there’s going to be a trade-off between taking money out of superannuation now and keeping it in and locking it up for their retirement savings in the future,” she said.
“What would be the effect of leaving that money in superannuation but not being able to pay your mortgage, not being able to pay off a credit card, having to sell something like your car just to get by?”