Second wave of super early releases involves millions more applications
Published 10 Jul 2020
The COVID-19 pandemic has brought changes to Australian’s lives, encompassing a wide range of professional and personal issues. One of these effects has been the ability to withdraw money from superannuation funds early, an opportunity that many Australians have taken. These withdrawals have led to several questions about the future of those individuals’ funds and the effect on supers as a whole.
Second wave of withdrawals begins with 500,000 applications
Money Management reported that in the week between June 29 and July 5, 132,000 members of super funds asked for the early release of some of their money. Since the second period of eligibility began, many people have requested an additional payment. According to the news provider, data from the Australian Prudential Regulation Authority shows there have now been 2.54 million payments throughout the course of the early release scheme. That reflects some people withdrawing twice and others applying to receive money from more than one super fund.
The number of applications for money in the June 29 to July 5 period totaled 511,000, 346,000 of which were repeat applicants. That period represented the first week of the new fiscal year, making it the state of eligibility for repeat withdrawals. Money Management reported that since the scheme began, the average amount withdrawn is $7,511 per application.
Potential for long-term issues due to withdrawals
According to Pursuit, there could be delayed issues for those who withdraw money from their super funds now. While the government’s stated intention for the plan is to enable Australians to have spending money during the difficult days of pandemic shutdowns, Pursuit cited research that found 40% of people withdrawing did not experience a drop in income during the crisis. With a lack of consistent income checks, members have found themselves able to take money with few questions asked.
Furthermore, the purchases made with early super funds are not always the items the government may want people to spend on. Pursuit noted that while more than half of the money – 64% – went to discretionary purchases and debt repayment, potentially stimulating the economy, 11% of additional spending from the releases has gone to gambling. Super withdrawals may also widen the gender pay gap. Occupations that skew female have been hard-hit by layoffs, and free child care will soon end ahead of its initial schedule, which are motives for women to withdraw – but this could leave them with less funds when it’s retirement time.
At Gerard Malouf & Partners, we are superannuation experts – if you’re considering disputing the payout of a loved one’s superannuation insurance, call 1800 004 878 or reach out to make an enquiry.