Funds hit back at Hume

In the wake of the early super scheme, several funds – including REST – have called for assurances about policy stability in order to ensure they can invest for the long-term and aid in Australia’s economic recovery. But Senator Jane Hume said that concerns about policy stability were overblown. 

“They’ve made a mountain out of a molehill here,” Ms Hume told media. “The amount that has been taken out for early release is less than 10 per cent of contributions that were made last year. There is no way that superannuation funds should have to dramatically adjust their investment strategies to account for such a small amount of money.”

But ISA chief executive Bernie Dean says that Australia’s super funds, having weathered the storm of COVID-19, now needed stable policy settings to ensure the smooth functioning of the superannuation system. 

“It is a testament to our [fund’s] focus on member interests and their strength how well they have managed the trio of recent liquidity shocks of the economic downturn, member switching and the government’s early release super scheme,” Mr Dean told ifa sister title Investor Daily.  “Trustees are now turning their attention to investments that help member balances recover, which will also help Australia’s economy.  

“Policy stability will be vital to ensuring trustees can effectively invest for the long- term to regrow balances and the Australian economy.”  

The latest data from the early release scheme shows that almost $15 billion has been paid out to nearly 2 million Australians. But with the number of new applications beginning to fall, AIST CEO Eva Scheerlinck says that now is the time for super funds to start thinking about the recovery. 

“Super funds have worked hard to process an unprecedented number of early release requests to provide support for those members facing financial hardship as a result of the COVID pandemic,” Ms Scheerlinck told Investor Daily. “But as Australia’s economic recovery begins to take shape, stable policy settings must be in place to enable super funds to deliver the best outcome for all members of the fund by investing for the [long-term].” 

BetaShares boss Alex Vynokur has also been critical of the early super scheme, calling it a “short-term sugar hit” for those impacted by COVID-19.

“The early release superannuation policy flies in the face of decades of consistent messaging and education and decades of consistent policy on the fact that building retirement nest eggs takes a long time through diligent savings, contributions and patience,” Mr Vynokur told Investor Daily. “Superannuation funds should not be used as an ATM when times get tough.”