Super accounts wiped to zero for 50,000 members

Addressing the Senate standing committee on economics last week, Industry Super Australia deputy chief executive Matthew Linden said the group understood around 5 per cent of total early release claims so far had seen super accounts fall to zero.

“Across the entire scheme that’s my understanding, that 50,000 accounts [were emptied],” Mr Linden said. 

“As the scheme is still operating people are making more claims, so those numbers will increase over time.”

Mr Linden said while this was “disappointing” for workers that would “lose the opportunity for compound savings”, it would also have a fiscal impact on super funds whose member bases would shrink as a result of the scheme.

Added to the costs involved in establishing the payments system for the scheme, Mr Linden said the current cost pressures on funds were intense, but that it was unlikely this would filter through to higher member fees.

“In terms of costs, in the scheme of things I’d expect the prospect of fee impacts to be low – there's other factors at play and I think trustees will do everything in their power to keep a lid on fees,” he said.

Industry Super chief executive Bernie Dean said the statistics around zero-balance funds presented an argument for an increase in the super guarantee as soon as possible, given younger workers would need higher compulsory contributions to gain back some ground on retirement savings.

“This is no cause for celebration that tens of thousands of young Australian workers have emptied their savings accounts,” Mr Dean said.

“How do you think those young people are going to recover the savings needed in the early part of their working life so they’ve got a meaningful nest egg and are not reliant on the pension?

“An increase in SG contributions over the next couple of years is going to be a main driver to helping those young people recover their balances.”

Mr Dean also dismissed concerns of potential super fund fee increases, saying “let’s focus on helping people recover their balance, not whether that is going to add fees to anyone”.