Early release superannuation payments reach $1.3bn in first week

On average, superannuation funds took 1.6 business days after receiving the application to pay members.

The report revealed that, on average, superannuation funds took 1.6 business days after receiving the application to pay members.

New figures released by the financial regulator reveal superannuation funds have heeded its warnings over the prompt release of cash under the COVID-19 stimulus scheme, with $1.3bn worth of early release payments mate to members in the scheme’s first week.

The industry data released by the Australian Prudential Regulation Authority — which includes applications from the first week of the early access scheme, from April 20 to April 26 — provided the regulator’s first insight into the rate and nature of nest egg withdrawals thus far.

The report revealed that, on average, superannuation funds took 1.6 business days after receiving the application to pay members. As of April 26, super funds had paid 162,879 of the 665,310 applications received by the funds, representing slightly under a quarter of the total applications — the remaining applications were still being processed.

Of the 167 superannuation funds, 107 made early release payments in the first week.

Speaking to The Australian, APRA Deputy Chair Helen Rowell said that while the data was limited, overall it appeared super funds and administrators systems and processes were working well.

“Overall, we’ve been quite comfortable with how the industry has responded. The level of exception, the number of applications that are not being processed automatically and straight through, is relatively low — less than 5 per cent across the industry,” Ms Rowell said.

“I think the next week and the subsequent weeks will paint a fuller and more complete picture, and give us a better sense of how this is tracking. But I guess my summary message is so far so good.”

In April, APRA warned super funds to hand members funds over within five days, or face being named and shamed. The data is being collected from super trustees to gain insight into how the process is working on a fund and industry level.

In a statement, the Assistant Minister for Superannuation Jane Hume said it was “pleasing” to note that trustees were delivering funds promptly.

“I’ve been speaking with the CEOs of super funds on a daily basis, and they have confirmed to me the process of early release of super is running smoothly. Australians are receiving much needed funds, at a time they need it mostly,” Senator Hume said.

On average, members withdrew $8,002 — around 20 per cent less than the initial limit. Australians can access up to $10,000 of their superannuation by June 30 and a further $10,000 from July 1 to September 24.

However, the test of superannuation funds ability to pay members promptly could come in the coming weeks. On Friday, Treasury data revealed that over one million people had requested to draw down up to $10,000 from their nest eggs, representing $8.38bn in early payments.

Over 1.7 million members are expected to access their nest eggs throughout the scheme, with estimates that more than $29bn will be withdrawn from super funds.

Hostplus and REST super funds have already drawn fire for failing to pay out savings within the five-day limit set by the regulator. Both funds, whose members are primarily drawn from the retail and hospitality sectors, are expected to be among the hardest hit by the scheme.

Although the number of applications had jumped significantly since April 26, Ms Rowell said she hadn’t received any indications that under-pressure funds were having any issues.

“We’re not aware about any concerns in terms of timeliness with any particular funds. Those funds, along with a number of others used Linked as their administrator — Mercer is another key administrator. As far as we understand it, all of the process is going pretty well,” she said.

On Friday, a spokesman for REST said over 90 per cent of payments processed so far had been done within the five-day time frame. The remaining payments had been flagged as part of its fraud and money laundering processes for additional verification, which would extend the processing time beyond five days.

Additional reporting: Cliona O’Dowd