Superannuation could cop second-wave hit, APRA warns

Regulators are warning of a potential second-wave run on super withdrawals as the second tranche of the COVID relief scheme opens.

The scheme to allow early access to superannuation has been designed to ease financial pressure on those whose work has been affected by COVID-19. Picture: AFP

More than $18 billion has now been withdrawn from Australia’s superannuation sector after the federal government announced the COVID-19 temporary Early Release Scheme and the prudential regulator is warning that a high number of fresh applications is expected for the start of the second tranche of the scheme.

Teh Australian Prudentiual Regulation Authority said in a statement on Monday that funds are expecting a second influx of applications for early release super after the second round of requests opened on 1 July. The level of demand may affect how long it took fund members to access their money, APRA said.

“High volumes of applications are expected for the start of the second tranche of the COVID-19 Early Release Scheme in early July. This may impact the processing time for payments being made by funds,” regulators said on Monday.

More than 2.4 million people have now hit up their super fund for extra cash amid widespread job losses as a result of the coronavirus pandemic, according to the latest APRA data.

In the week to June 28, super funds have paid out $1.2 billion to 129,000 members, bringing the total funds paid out to $18.1b since the inception of the scheme.

AustralianSuper, the nation’s biggest superannuation fund, has been the hardest hit by the scheme, with 346,267 members withdrawing more than $2.4b to June 28.

Sunsuper members have withdrawn nearly $1.7b, while members in hospitality fund HOSTPLUS have withdrawn more than $1.6b.

Most of those members have waited less than 5 business days for their super to appear in their bank account, APRA said.