Fund members face Super ‘double whammy’
About 2.4 million people have applied to withdraw funds from their super accounts under the government’s “early access scheme” put in place during the pandemic.
By July, about 500,000 people had already accessed the scheme, which allows members to withdraw up to $20,000 from their super fund.
Industry super funds have warned that people who make withdrawals under the scheme face a double whammy if the planned increase in employer contributions from 9.5 per cent to 12 per cent is cancelled.
According to Industry Super Australia modelling, if the increase is abandoned, a typical man who draws down the maximum $20,000 allowed under early release rules will lose $180,000 in retirement savings.
To make up the difference, he would have to work an extra 6.5 years past retirement age, to 73 and a half.
A woman would lose $150,000 and have to work eight years longer, until she was 75, to make up the difference.
Experienced business analyst Glenda Korporaal, an associate editor of The Australian newspaper, says the early access scheme has set a dangerous precedent.
“The danger for the super industry is that if easier access conditions are continued or not well monitored, they will be seen as a handy ATM to draw down funds for all events of future hardship,” she wrote.
“Another severe bushfire season? Allow those affected to draw down their super. People affected by severe flooding or cyclones? Allow them to draw down their super. The list goes on.
“Allowing early access to super simply means that there will be no money, or a lot less money, for people – sadly, the more vulnerable in society – once they get to retirement age.”