Early super surge expected before July cut-off

The government’s scheme, as part of its response to COVID-19, has allowed fund members in financial distress to withdraw up to $10,000 before July and a further $10,000 before September.

Treasury confirmed on Thursday that 1.65 million Australians had accessed the scheme to date, applying for a total of $13.2 billion.

Hospitality industry fund Hostplus recently indicated it was confident that the volume of claims would ease as the economy commences reopening, having already seen a decreased number of claims week-by-week.

But Eva Scheerlinck, chief executive of industry body Australian Institute of Superannuation Trustees (AIST) has said while claims are expected to gradually decline in the meantime, the industry can expect spikes in early release claims towards the end of the financial year and as people file their taxes.

“Particularly if we don’t have more certainty around the doubling of the JobSeeker allowance and any more announcements in relation to JobKeeper,” Ms Scheerlinck told Investor Daily.

“There might be some people who look to access their super just in case, if they don’t feel confident about there being financial support for them in the longer-term.

“We do expect it to keep trending down but probably before the end of June, there’ll be another spike and then after July when people go to the [ATO] website to do their taxes, to do their tax return, there might be another spike on the other side as well.”

‘We need absolute certainty’

Despite the early release scheme being legislated as a temporary measure, she added the super industry needs certainty around its policy, with “some voices in government… talking about greater flexibility for members, particularly low-income earners”.

One of the voices pushing for more access to super, she confirmed, is Liberal senator Andrew Bragg.

“One of the big things to come yet is the superannuation industry’s role in the economy’s recovery of Australia,” Ms Scheerlinck said.

“We obviously have some super funds already helping with capital raisings going in the last couple of months. There will also be collaboration between state and federal government and the super fund industry about the projects that will [help stimulate] the economy and grow jobs in various parts of the country.

“But in order for us to really participate in that properly, we need to have some very stable policy setting. We need absolute certainty that this early release scheme is a one-off temporary thing so that funds can have more certainty about their abilities for the long-term.

“We would like to see very strong statements from government, to say that the policy settings around the long-term nature of superannuation and it only being available for retirement, [to make it] clear.”

Treasury initially estimated that the amount withdrawn from funds under the scheme in the months to come would total at around $27 billion, around 1 per cent of assets held by the super sector.