Early super withdrawals slow as ACTU condemns drain on savings

Withdrawals of early super hit their lowest weekly level since the scheme began, as unions again attacked the raid on savings.

Debate continues over the wisdom of allowing workers early access to their super.

The weekly amount withdrawn under the government’s COVID-19 superannuation early release scheme has slowed, even as the Australian Council of Trade Unions accused the government of viewing retirement savings as “a piggy bank to be dipped into whenever the government decides”.

New figures from the Australian Prudential Regulatory Authority show that just $380m was paid out to 51,000 fund members in the week ending August 30 – the lowest weekly payout since the program’s inception.

In total, $32.6bn had been paid to more than four million applicants.

The scheme allows Australians who have seen their incomes reduced due to the pandemic to withdraw up to $20,000 from their super early in two tranches worth up to $10,000 – one last financial year and one this financial year.

The average amount withdrawn under the scheme is $7680, increasing to $8439 for repeat applications.

The government anticipates that $42bn will be withdrawn in total before the end of the year.

However the debate over the effectiveness of the scheme has only heated up, with detractors accusing the government of cost-shifting the impacts of the pandemic onto the retirement savings of Australians, while the Grattan Institute said the perceived hit to retirement income had been overstated.

On Monday, ACTU president Michele O’Neil criticised the amount withdrawn under the scheme and calls from some Liberal politicians to allow Australians to use their superannuation for a home deposit.

“Without a decent superannuation system we’ll go back to a world where most people retire on a pension that barely puts food on the table,” Ms O’Neil said.

“Under the cover of COVID-19 the government has already ripped $42bn from Australian’s super accounts and this will cost working families hundreds of thousands at retirement time.

“Superannuation must be protected to provide Australian workers with a dignified retirement.”

Grattan Institute household finances program director Brendan Coates said that although some of the withdrawals could be attributed to “gaps” in the government’s income support programs, the potential hit to retirement income “is mostly overblown”.

“The real question is not what your super balance will be at retirement, it is what your income will be at retirement,” Mr Coates told The Australian.

“For your median worker who takes out $20,000 at age 35, the hit to your retirement income is only $20,000 over the course of their retirement. Because they have less super, they get more pension.

“And gaps in the government’s income support such as not extending JobKeeper to some casual workers and migrants means that more has been taken out of super than is preferable, but at the same time the scheme is providing a lot of benefits and will stop a lot of people defaulting on their mortgage.

“NAB has disclosed that 20 per cent of their customers who have deferred their mortgage have lost more than 50 per cent of their wage income since April.”

Mr Coates said it the weekly amount withdrawn under the scheme is unlikely to increase again.

“It’s pretty clear that numbers are slowing because people have exhausted their allocation,” he said.

“The one outstanding question is whether you see an uptick of applications heading into Christmas either because second range job losses accelerate.

“The government is forecasting unemployment to be around 10 per cent by December.”