Superannuation funds increase pools of cash despite Australians withdrawing their money early

The early access to superannuation scheme has barely impacted Australians’ retirement savings, after more than 2.7 million people raided their accounts. See the new results.

The rush by millions of Australians to withdraw their superannuation early and a rebounding sharemarket has left the nation’s honey pot of retirement savings virtually unscathed, new statistics show.

Data from the banking regulator, the Australian Prudential and Regulation Authority, released on Tuesday found total superannuation assets fell by just 0.6 per cent in the June quarter, from $2.88 billion to $2.86 billion.

The Federal Government’s early release of superannuation scheme has come under intense scrutiny by the Federal Opposition for allowing cash-strapped Australians to withdraw their retirement savings prematurely.

Under the scheme eligible applicants who have suffered hits to their incomes could withdraw $10,000 tax-free last financial year and another $10,000 up until December 31.

Latest ATO figures show more than 2.7 million people have withdrawn $33.9 billion from their super accounts under the scheme.

But a rebounding sharemarket has helped cushion the financial blow to super accounts during the COVID-19 crisis.

Figures from super research firm Chant West showed median growth funds (61 to 80 per cent in growth assets) climbed by 6.4 per cent in the June quarter.

This meant for $100,000 in super savings, it climbed to $106,400.

Debate has erupted over whether the compulsory superannuation payments should rise from 9.5 per cent to 10 per cent in 2021.

During this quarter the amount of quarterly benefits paid out to Australians climbed by 31.2 per cent in 12 months, from $76.5 billion to $100.4 billion.

All types of super funds also increased their assets in the June quarter including industry super funds which grew from $717 billion in March to $747.9 billion in June.

Retail funds also fattened, growing from $1.85 trillion to $1.9 trillion in the same period.

Federal Labor MPs have criticised the scrutiny of the scheme which allows Australians to go through a self-assessment application via the Australian Taxation Office’s online portal before getting the green light from their fund to withdraw money.

The compulsory superannuation guarantee is legislated to rise to 10 per cent on July 1, 2021 and then in increments up to 12 per cent by 2025.

Reserve Bank governor Philip Lowe warned this month that ­increasing the super guarantee would “certainly have a negative effect on wages growth”.

He said if it went ahead he would “expect wages growth to be even lower than it otherwise would be”.

This legislation has also come under fire in recent weeks from Coalition backbenchers who said the rise must be halted.

Many MPs believe small and medium-sized businesses cannot afford the hikes and want it delayed or scrapped as the economy fights to recover from the deepest recession since the 1930s.

Legislation passed the Senate on Tuesday allowing people to choose their own super fund instead of being forced into one chosen by their employer.

Previously not all people were allowed to choose their own super fund when starting with a new employer.

@sophieelsworth

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Originally published as Superannuation funds increase pools of cash despite Australians withdrawing their money early