Superannuation drain on Westpac worth $700m

More than $700m has been drained from Westpac’s wealth arm, BT Superannuation.

Westpac CEO Peter King. Picture: Nikki Short

More than $700m has been drained from Westpac’s wealth arm BT Superannuation, with the retail fund putting its high withdrawal rate down to a large membership base.

About 90,000 BT account holders have requested payment through the early release of super scheme, making it one of the hardest-hit retail funds.

While major industry funds constitute the biggest proportion of withdrawal requests, BT’s Retirement Wrap fund has paid out $630m — the sixth-largest amount of any wealth provider.

The group’s investor platform funds Asgard and Advance Retirement are two of the slowest when it comes to paying members in the recommended five business days.

According to weekly figures released by the Australian Prudential Regulation Authority, 48.4 per cent of the 8567 withdrawal requests made to Asgard have been paid within five days. As at May 31, Asgard had paid out $64.8m to 7867 members.

BT’s Advance Retirement has only paid 32.5 per cent of members within five days. However, the fund has only accrued a total payout figure of $1.1m.

Liberal MP Tim Wilson, who is chair of a House economics committee, told The Australian that the expectation was that funds needed to act swiftly to make payments to members.

“It’s disappointing some funds haven’t taken the appropriate measures to connect members with their money in a time-sensitive way,” Mr Wilson said. “It’s the members’ money.”

Mr Wilson questioned APRA on June 3 if it is taking action against funds not paying account holders in time. APRA told the committee it has no legal power to force funds to make payments within five business days.

BT’s Advance and Asgard funds are investment product offerings that allow a member to allocate and choose where their super is invested. The investment choices are usually administered via a financial adviser.

BT said both funds represented about 10 per cent of the group’s withdrawal requests and the del­ay was partly a result of the products’ investment infrastructure.

“For certain types of products, when a member seeks to withdraw their funds from a super account, we are required to sell down the investments from the account in line with the investments held and that can take some time if it isn’t held in cash,” a BT spokeswoman said.

BT general manager of superannuation Melinda Howes said the wealth group supported the economic measure implemented by the Morrison government.

Ms Howes said fully drawn down accounts would remain open for up to 12 months and life insurance policies would stay active for 60 days from the day of a withdrawal request.

“While we don’t want to see Australians’ retirement savings diminished, it is important to remember that it is their money,” she said. “Having access to super early may be a setback to retirement goals, but … there are ways to get back on track.”