Applications for early access to super reach $3.8bn in three days

Nearly half a million Australians have ignored warnings and sought early access to their super under a COVID-19 package.

People queue outside a Centrelink office after being thrown out of work by the fallout from the coronavirus pandemic. Picture: AFP

Nearly half a million Australians have sought early access to their super savings as part of the federal government’s coronavirus rescue package, Treasurer Josh Frydenberg says.

The Australian Taxation Office approved 456,000 applications for early access to super between Monday and Wednesday at 12pm, totalling $3.8bn, Mr Frydenberg said.

“Those applications are now with the superannuation funds for their payment over the next five days,” he said.

The average withdrawal was $8000, he added.

Up to 1.5 million workers are expected to dip into their super as part of the support package, with younger workers more likely to take part in the scheme, according to Industry Super Australia.

Before applications opened on Monday, more than 900,000 Australians had registered their interest in taking part in the scheme, which allows workers to take out $10,000 in savings before June 30, and a further $10,000 between July 1 and September 24.

Treasury forecasts initially indicated 1.3 million savers would draw down $27bn from their nest eggs between now and late September, but experts are predicting the number could soon top $50bn.

Only those who are unemployed or have lost at least 20 per cent of their working hours or turnover are eligible.

After receiving ATO approval, super funds have five days to make the payments into members’ bank accounts, as ordered by the prudential regulator.

The early access comes after super funds in March suffered their worst monthly and quarterly returns since the introduction of compulsory super nearly three decades ago, leading to concern from experts who say withdrawals now will only lock in losses.

The median growth fund shed 9 per cent in March and fell 10.1 per cent over the quarter, according to research released this week by Chant West.

“If they take money out they will be doing the very thing we caution against, which is to lock in what at the moment are only paper losses. … Those losses, when compounded over many years, will knock a big hole in their eventual nest eggs,” Chant West senior investment research manager Mano Mohankumar said.

Analysis by Industry Super found that a 20-year-old who accessed the full $20,000 available under the scheme could lose more than $120,000 from their retirement nest egg, while a 30-year-old could lose $100,000 and a 40-year-old more than $63,000.

Accessing super early should be “a last resort” for workers, Industry Super said.