COVID early super release saw 1 million NSW residents withdraw $10b

About a quarter of the one million NSW residents who withdrew from their super early drained their retirement savings, new figures show.

More than one million NSW residents withdrew $10 billion from their super early, with about a quarter wiping out their retirement savings.

About 225,000 NSW workers took their super balance down to about zero dollars in the past nine months, the most of anywhere in the country, ­according to analysis by Industry Super Australia.

Young people in the electorate of Sydney withdrew $445 million alone, with about 12,907 of the 45,685 people who accessed super early draining their account entirely.

AMP Capital’s chief economist Shane Oliver. Picture: Jane Dempster

About 30,340 people in the inner west electorate of Reid withdrew $306.7 million, while 28,725 people in the seat of Barton cashed in $292.1 million.

The federal government’s scheme allowed Australians who had lost work to withdraw up to $10,000 two times last year during the pandemic.

AMP Capital’s chief economist Shane Oliver said withdrawing super early was a “trade off” some Australians may have found necessary in order to cover rent or “get by”.

Industry Super Australia chief executive Bernie Dean.

“Particularly if people lost their job or suffered reduced hours, they could use the money to get by ... even if that came at the cost of less savings in retirement,” he said.

He said the total value of money withdrawn in NSW was about 2 per cent of the state’s economy, which would have helped cushion the financial blow of the pandemic.

“If people have come through the year in a position to start rebuilding their savings, it’s necessarily not a bad outcome … particularly if it’s meant they have not had to sell the house.”

But Industry Super Australia chief executive Bernie Dean said draining retirement funds was a bad idea.

“Busting into super early comes at a steep cost for the individual and future taxpayers, as a society we shouldn’t be demanding our young people pay the price yet again,” he said.