Many Australians don’t have the $20,000 in retirement savings they have been given approval to access
Cash-strapped Australians rushing to access their superannuation money early, but they’ve been warned to tread carefully before cracking open their retirement savings.
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Exclusive: Millions of Australians eligible to access their superannuation savings early simply do not have enough money in their accounts to withdraw the maximum amount allowed.
Official figures from the Australian Taxation Office showed 3.5 million Australians have balances of less than $20,000 in super and most are younger Australians.
The data analysed by Industry Super Australia showed the following:
• For those aged under 30, 72 per cent have less than $20,000.
• For those aged 30-39, about 25 per cent have less than $20,000.
The Federal Government announced new rules amid the COVID-19 outbreak that allows eligible Australians to tap into their super accounts to make ends meet.
Treasurer Josh Frydenberg dubbed it the “people’s money” and said they would be allowed to touch their own hard-earned cash.
Applicants can access $10,000 this financial year and $10,000 next financial year tax free.
It is estimated this will help $27 billion in super flow back into the hip pockets of Australians – less than 1 per cent of the $3 trillion in super held nationally.
ISA’s chief executive officer Bernie Dean said funds would do all they could to help those members who needed financial assistance but he warned of the dangers.
“But members need to tread carefully before they think of cracking open their retirement nest egg as it comes at a steep price – often more than six figures,” he said.
“For millions the government early release scheme could allow them to wipe out their super balance meaning they have to start again.”
If a 30-year-old accesses $20,000 from their super now they could stand to lose $100,000 by the time their reached retirement age.
The Association of Superannuation Funds of Australia’s chief executive officer Dr Martin Fahy urged Australians not to rush into withdrawing from their super accounts, instead they should consider other financial assistance first.
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“People need to think carefully before accessing their superannuation early and should first explore the financial support being provided by the Government,” he said.
“These are anxious times but it’s important for people to prioritise accessing financial support from the Government ahead of emptying out their superannuation accounts.”
Those who are eligible to access their super early must meet at least one of the following criteria:
• ARE unemployed;
• ARE eligible to receive a jobseeker payment, youth allowance for job seekers, parenting payment or special benefit, or farm household allowance;
• WERE made redundant or had their working hours reduced by 20 per cent or more after January 1 this year
• SOLE traders who business has been suspended or their turnover has fallen by more than 20 per cent can also apply.
Under current arrangements, employers make 9.5 per cent compulsory superannuation payments to their staff member’s balance each pay cheque. This is scheduled to increase to 10 per cent from July 1, 2021.