Almost 500,000 Australians have cleared out their superannuation accounts

Almost half a million Aussies have completely cleared out their superannuation accounts with demand for the government scheme outstripping expectations.

Hundreds of thousands of young Australians have wiped out their superannuation savings under the Morrison Government’s early release scheme stoking fears they’ll be left to rely on the pension when they retire.

New analysis from Industry Super Australia (ISA) estimates 395,000 Australians under the age of 35 have already wiped out their entire super account, even before the second phase of the scheme begins.

In March, super rules changed to allow Australians who had lost their jobs or had hours reduced due to the pandemic to access $10,000 in super and a further $10,000 from July 1.

The ISA estimated about 480,000 Australians had likely cleared out their super funds by June 14, and about 395,000 of these were under the age of 35.

These figures are based on analysis of Australian Taxation Office data on accounts with balances below $10,000 and Treasury statistics on the age distribution of those who applied for the scheme.

On average, about 15 per cent of Australian workers have accessed their super early.

Three states were above the national average – Queensland at 20 per cent, Northern Territory 19 per cent and Western Australia 16 per cent. Only 8 per cent of ACT workers accessed their super early.

Demand for the scheme has already outstripped the Government’s expectations that about 1.65 million Australians would take out $27 billion.

So far about 2.1 million people have taken out at least $15 billion from super and the next tranche also appears to be popular, with the ATO’s website crashing this week due to strong demand.

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There are concerns about people taking money out of their superannuation. Picture: David Swift

While industry super funds have supported the scheme’s aim to allow people to access cash when they are in financial need, the ISA is renewing calls for members to only access the funds as a last resort, amid troubling reports the money is being used to gamble, buy alcohol and for other discretionary spending.

A 25-year-old taking out $10,000 now could have $49,000 less in retirement, a 35-year-old could lose up to $34,000 and a 45-year-old up to $23,000.

There are also concerns that calls to dump the increase to the super rate from 9.5 per cent to 12 per cent by 2025 will make workers more reliant on the aged pension.

“To have hundreds of thousands wiping their savings out midway 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,” ISA chief executive Bernie Dean said.

“The Prime Minister and Treasurer must stick by their promise to increase the super rate because it’s 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.”