Super funds flooded with claims

Industry super funds have been flooded with the bulk of requests for early withdrawal for funds as payouts pass $6bn in the scheme.

Industry super funds have been flooded with the bulk of requests for early withdrawal for funds as payouts pass $6bn in the scheme, introduced to cushion the blow of the coronavirus downturn.

New figures released by the Australian Prudential Regulation Authority reveal the extent of the early super requests, which have forced some funds to sell down assets to meet demands for cash payments within a week.

The figures show that $6.3bn has been paid to more than 830,000 Australians facing financial hardship due to COVID-19, with five major industry funds making up nearly half of early payments.

Australian Super, Queensland’s Sunsuper, Hostplus, REST and Cbus topped the list of 142 funds being flooded with requests.

New early access rules allow workers to take out $10,000 in savings before June 30, and a further $10,000 between July 1 and September 24. Both payments are tax-free.

The five funds, while open to all, represent a significant proportion of workers within heavily impacted industries such as aviation, hospitality, building construction and retail.

Sunsuper topped the list, with $784.8m paid to more than 108,000 of its members since the launch of the scheme last month. Its members have requested an average of $7248 each.

The Queensland-based wealth group has been heavily exposed to the fallout from the aviation industry, being the default super fund to embattled Virgin Australia — which has stood down nearly all of its 10,000-strong workforce.

Sunsuper general manager of customer engagement Stevhan Davidson said the group’s younger membership base was a major factor for the high proportion of funds released.

“With 1.4 million members and a relatively young and diverse membership base employed right across the economy, we anticipated there would be many who would take advantage of the early access provisions,” Mr Davidson said.

The country’s largest superannuation fund, AustralianSuper, has paid out $763.7m to nearly 100,000 of its members, with an average payment of $7687. According to APRA, 142,475 of its members have made applications to withdraw funds, suggesting payouts will pass $1bn within the next week. Assistant Minister for Superannuation and Financial Services Jane Hume noted that 96 per cent of the country’s super funds had paid members within the five-day time frame set by the Australian Taxation Office.

“As of today, over one million Australians have requested early access of superannuation. It is important to remember that behind every one of those applications is a story of hardship due to the COVID-19 pandemic,” Senator Hume said.

She said the latest figures demonstrated that superannuation trustees “understand the importance of getting money into the hands of members in a timely manner”.

More than 1.7 million savers are expected to draw down funds from their nest eggs, with Treasury estimating more than $29bn will be withdrawn from super funds in the coming months.

Hostplus has also seen a hit to its portfolio as a significant proportion of its members work in impacted sectors such as hospitality, tourism and recreation.

Hostplus chief executive David Elia said $980m had been paid to 142,376 members as of May 6.

Mr Elia noted some delays had occurred due to fraud risk and members holding direct investment options.

Major retail industry fund REST has paid $515m to nearly 80,000 of its members, with the wealth group receiving 106,000 applications for early access to funds.

APRA deputy chair Helen Rowell noted the system had dealt with an influx of claims due to the COVID-19 support measure, but she expected trustees to make payments within five business days.

“Although delays will occasionally occur, APRA expects trustees to make all payments as soon as practicable, and we are monitoring closely to ensure that remains the case,” Mrs Rowell said.

The banking and financial regulator noted that close to one million Australians had requested early withdrawals, with an average processing time of 3.1 days.

Among the slowest to pay out members is Intrust Super, with more than 70 per cent of payments happening outside the five day deadline. Qantas Super was also slow to pay, with 55 per cent of funds going to member bank accounts after the five day deadline.

Elsewhere, industry fund Cbus has paid 35,212 of its members more than $300m, at an average amount of $8532.

BT Funds management has released approximately $456m from its respective super funds, while CBA’s wealth management arm Colonial First State has paid out $388m to its members.