Early super withdrawals to exceed projections, as scheme extended

Superannuation members will know have until 31 December to withdraw A$10,000 from their accounts, extended from the previous deadline of 24 September.

The Australian government has extended its covid-19 Superannuation Early Release Scheme, as payments made passed the A$25 billion ($17.6 billion; €15.19 billion) mark this week.

In a fiscal and economic update, treasurer Josh Frydenberg unveiled a package of new measures to support the Australian economy and people affected by the pandemic, one of which was an extension of the deadline to apply for funds under the early release scheme.

Previously, superannuation members who have suffered financial hardship as a result of the covid-19 pandemic were able to withdraw A$10,000 from their super accounts before 30 June this year, plus an additional A$10,000 in the new financial year that began on 1 July.

The deadline for applications for early release under the second tranche had been set at 24 September and today’s announcement extended this deadline to 31 December.

The extension has been granted to allow people more time to access their superannuation balances in an acknowledgement that the economic downturn may not affect everyone at the same time. Also, super balances may be needed to provide individuals with financial support as the government’s JobKeeper income support scheme begins to taper off after September.

The Australian Prudential Regulation Authority’s latest statistics on the early release scheme showed that A$25.3 billion in payments had been made up to 12 July, with an average payment of A$7,718.

Assistant minister for superannuation Jane Hume told Infrastructure Investor last month that the scheme was progressing “very much” as expected, with the government forecasting around A$27 billion to be withdrawn.

With payments already at more than A$25 billion prior to the announcement of today’s extension, it seems likely that withdrawals will now far exceed the government’s forecasts.

The Association of Superannuation Funds of Australia today warned against the long-term impacts of people drawing down their superannuation account balances, both on individuals and the broader economy.

ASFA chief executive Martin Fahy said: “These are anxious times and we face challenging economic headwinds. As the treasurer outlined today, Australia remains in a relatively manageable position in terms of debt, compared with our OECD peers.

“If low income earners and young people’s superannuation continues to be eroded by the early release stimulus scheme, we risk losing sight of superannuation’s intended purpose, which is to provide adequate income for Australians in retirement.”