$12.2bn released through early release of super scheme

The superannuation sector has been drained of more than $12bn by hardship requests, with industry funds still the most frequently tapped.

Australians have withdrawn more than $12bn from superannuation under the early withdrawal scheme designed to combat the economic effects of COVID-19.

Requests for early release of super continue to rise, with industry fund members dealing the biggest blow to Australia’s $3 trillion superannuation sector.

Figures released by the Australian Prudential Regulatory Authority on Monday show $12.2bn has been drained from the country’s retirement savings pool, with 50 per cent of total applications made to five industry funds.

AustralianSuper, Sunsuper, Hostplus, Rest and Cbus accounted for 887,804 of the 1.78 million applications lodged to the tax office for the early release of super scheme.

The federal government implemented the early release scheme in April as a measure to assist Australians affected by the COVID-19 economic downturn.

Treasurer Josh Frydenberg on Monday said more than $15bn had been withdrawn from the super sector. The average request has been for $7476, with payments usually made in 3.3 business days, APRA says.

Hostplus has had the highest volume of early withdrawals, with 16 per cent of its total membership base requesting $1.18bn.

About 12 per cent of account holders at both Sunsuper and Cbus have lodged applications. Sunsuper, the default provider for Virgin Australia, has already paid out $1.25bn to more than 188,500 members, while Cbus has paid out $676m.

The country’s largest industry fund, AustralianSuper, has handed out $1.6bn to 11 per cent of its membership base, with an average payment of $7490.

Retail employees industry fund Rest has had 10 per cent of its account holders request withdrawals, totalling $1.1bn.

A Rest spokesman said its membership base had declined since it last reported to APRA in June 2019. The fund said its membership had reduced from 2.02 million to 1.75 million, as at April 30.

Rest chief executive Vicki Doyle said super funds were playing a vital role in assisting Australia’s economic recovery, but ongoing short-term reliance on the pool of funds could affect future investment decisions.

“It’s important that a short-term approach to the current crisis does not create a longer-term crisis for Australia’s retirement savings,” Ms Doyle said.

“If members’ super is regularly called upon to provide short-term fiscal support to the economy, it changes the way we invest on behalf of our members.”

Despite industry funds making up the bulk of savings released, a slew of smaller retail funds have had a higher proportion of members applying for early super payments. Tidswell Master Superannuation Plan has had 25 per cent of its members apply for the scheme, while Islamic fund Crescent Wealth has had 18 per cent.

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Figures released last Wednesday by APRA, revealed the country’s $3 trillion superannuation industry contracted by 7.7 per cent, with $227.8bn lost over the March quarter. .

A survey on early superannuation withdrawals published on Friday by the Australian Bureau of Statistics revealed 36 per cent of respondents had placed the funds withdrawn into their savings accounts.

It also noted that 57 per cent of respondents planned or had used retirement savings to pay down debt and household bills.

The ABS survey also coincided with monthly banking statistics released by APRA, which highlighted savings deposits over the month of April had increased.