38,000 Hostplus members empty super

38,000 members of one industry super fund have totally emptied their accounts through the early access scheme, a parliamentary committee has heard.

Hospitality industry fund Hostplus says more than 10 per cent of members that had asked for early access to their superannuation had totally emptied their accounts.

A parliamentary committee has heard that 38,000 members of hospitality industry superannuation fund Hostplus have totally emptied their accounts using the early access to superannuation scheme brought in to ease the economic impact of the pandemic.

Hostplus chief executive David Elia made the revelation while appearing before the House Standing Committee on Economics as part of its hearing into the superannuation sector.

“Sadly, around 38,000 members have actually emptied their accounts,” Mr Elia said

Mr Elia said Hostplus began working with the ATO on the early release of super scheme 18 days prior to its commencement on April 20, with hundreds of thousands of members subsequently rushing to access their retirement savings early.

“To give you an idea of changing transaction volumes, Hostplus would usually make 2500 to 3000 hardship payments a year,” he said.

“In the first tranche alone, we processed 243,000 transactions.”

Hostplus CEO David Elia. Picture: Stuart McEvoy. .

“As of the 4th of September 2020 (we have processed) more than 387,000 applications and $2.8bn has been paid out.”

Mr Elia said the 25 to 44 age group had dominated the withdrawals, with female members withdrawing approximately 46 per cent of claims, worth $1.3bn.

Hostplus CEO David Elia also said the suburbs with the highest number of early release of super claims from fund members were lower on the socio-economic scale.

“We’ve got Melbourne and Sydney, that’s number one and number two,” he said.

“And then we’ve got Auburn, Hurstville, Strathfield, Rockdale, Glenroy - which is where I grew up and my parents still live.”

Mr Elia said that despite the impact of COVID-19 and the early super release scheme, the fund had managed to grow assets under management by $4bn to more than $50bn.

“Over the year, our average monthly inflows remained strong at approximately $630m a month. Impressively, this has actually increased to $640m per month over the last three months.”

“Hostplus’s total membership has also grown during the year from 1.19m to 1.3m,” he said.

According to data released by financial regulator APRA on Monday, there have been 3.1 million initial applications and 1.2 million repeat applications under the two-tranche scheme, with an average payout of $7680.

According to APRA’s data, as of August 30, Hotplus had received the fourth highest number of early access requests among all funds, behind Australian Super, Sunsuper and REST.

Mr Elia said it was likely executive staff and investment strategy managers would have remuneration reduced due to the fund’s performance throughout COVID.

Committee chair Tim Wilson asked whether Mr Elia believed, like Australian Super CEO Ian Silk, that executive remuneration at funds should be reduced if their returns dipped into the negative throughout the crisis.

Mr Elia said that as Hostplus’s balanced fund produced a -1.74 per cent return, remuneration would be affected.

“We are actually going through that process as we speak chair,” he said.

“There are two components to senior executive and investment staff salaries: there is a fixed base salary, and there is a variable component.

“And there is no doubt that those variable elements will be affected as a result of the performance of the fund.”