Senator defends early access to super scheme

Almost 350,000 Australians have double-dipped into their retirement savings, claiming ongoing financial hardship due to the coronavirus pandemic.

Figures released by the Australian Prudential Regulation Authority show that 345,000 people have made repeat applications to access their superannuation early, for an average payment of $8,904.

The early release of super was implemented by the federal government as a financial measure to support Australians during the coronavirus pandemic. It gives Australians the ability to request up to $10,000 in both the 2020 and 2021 financial years.

As of 5 July, $19.1 billion had been paid to approximately 2.7 million account holders, with APRA estimating new requests will sap the superannuation sector of roughly $23.3 billion.

Critics have argued that accessing your superannuation should be a “last resort” only, after it was revealed by Industry Super Australia (ISA) that about 480,000 Aussies had completely spent their nest egg and that accessing cash now would have dire long-term consequences for retirement.

A 60 Minutes report showed some Australians who have withdrawn $10,000 from their superannuation splashing the cash on “non-essential luxuries” like plastic surgery and new cars.

The story followed an Alpha Beta and Illion report, which found that members were using the additional cash on consumer goods.

A sample of 13,000 people who accessed their super under the early release scheme shows that 64 per cent of spending went on discretionary items such as clothing, furniture, restaurant food, gambling and alcohol.

However, the Assistant Minister for Superannuation, Financial Services and Financial Technology, senator Jane Hume, defended the scheme, which has helped people during a hard time.

“The average home loan at CBA is $450,000, current variable rates are 2.29 per cent – that’s interest of $10,000 so one withdrawal of early release is enough to keep an average family in their home for a year. The vast majority have withdrawn because they are in financial hardship or they have created a buffer in case they are in hardship.

“Along with the number of people that have withdrawn the money, there’s an economic theory called revealed preference, so this revealed preference about ‘when I’m in trouble, I need this money now rather than locking it up for 40 years’, that’s pretty powerful,” she concluded.