Early Release of Superannuation (ERS) by Australian Government
July 28, 2020
The COVID-19 pandemic is a unique worldwide event that has stopped ships and planes, isolated citizens, slowed down economies, and eliminated millions of jobs.
Every sector impacted and Governments around the world are working round the clock.
They are being forced to take unprecedented actions to rescue the health of their populations and safeguard their respective economies.
One of the measures taken by the government here in Australia was to allow early release of Superannuation Scheme (ERS) which allows eligible members of superannuation funds (unemployed, small businesses, and others) to get early access to the money held there.
Around 42 percent of applications made by people under the age of 30.
This is an average of about AUD $7,500 per person under 30 and amounts to AUD $6 billion in total.
A FUTURE PROBLEM
The high number of amounts are withdrawn now won’t be available to those people on their retirement,
it’s likely that these people will most likely qualify for a higher level of the age pension and/ or simply have low funds at retirement
At this time as per reports, an approximate AUD $15 Billion has been withdrawn from Superannuation in Australia.
The AUD 15 billion could have grown to AUD 50 billion or more over a 25-30 year period.
This would have allowed superannuation funds to make a range of investments for the general health and wealth of the economy.
$60 Billion Miscalculation of Job Keeper cost funding may have saved the future problem in a big way,
since it would have saved the withdrawal from their super.
The early access of super during COVID-19 is an exceptional event, and superannuation funds have had to face up to systematic risk.
This is the risk of dramatic circumstances that affect a whole economy in an uncommon way.
The ERS scheme has resulted in a run-down of cash and more liquid securities to meet the withdrawals.
THE GENDER GAP IN AUSTRALIA
In general, the effect on women may be a lot harsher. Women, in common, have lower superannuation balances – on average retiring with 31 percent less than men.
So although women live an average of six to seven years longer than men,
they are living with a lower income for a longer period.
As a greater proportion of people in part-time and low paid jobs are women, some women may have had little choice but to access funds now and let the future look after itself.
On average, women have withdrawn more of their super balances compared with men and 14 percent of women are clearing out their entire super balance compared to 12 percent of men.
These withdrawals are widening the gender superannuation gap.
Australian Bureau of Statistics shows that of all the jobs lost in Australia during COVID-19,
Men make up 45 percent and women remaining 55 percent of the unemployed.
Women’s work hours have also reduced comparatively men’s hours.
A message to all fellow Australians,
“it’s not a great idea for Dipping early into your Super if you weren’t impact by Covid19.”
“Do not wait to get an audit by ATO.”
ATO has warned the public as they investigate individuals and businesses for dipping into their super early.
If you need any help with your superannuation funds feel free to Contact Us.