STRATEGY
The delicate balancing act of early release super
The design and rollout of the federal government’s early release superannuation scheme has been the subject of much conjecture in recent months. Andrew Yee argues how people who have accessed the scheme are going to adequately restore balances in time for retirement is of great concern.
ANDREW YEE is director of superannuation at HLB Mann Judd Sydney
The early release superannuation (ERS) scheme has unquestionably been a lifeline for many Australian workers financially affected by COVID-19, whether it be through redundancy or reduced working hours. Being able to access money they wouldn’t normally be able to has meant the difference between surviving and not being able to pay rent or provide for a family. Accessing a portion of their entire super savings now, however, will adversely impact on a person’s ability to retire comfortably later in life; the short-term gain could have negative longer-term consequences. The government’s data indicates a vast number of presumably lower to middle-income earners have benefited from the ERS scheme. An estimated 3 million people have taken advantage of the scheme
in some form ($10,000 up to 30 June this year and a further $10,000 from 1 July to 31 December), with around $42 billion exiting super balances to date. It’s a drop in the ocean compared to the total superannuation pool of around $1.5 trillion, but it’s a significant amount nonetheless. It is also enough to impair the government’s ability to support some of these people in the long term and will undoubtedly dent federal revenues for many years to come. To be eligible, those applying need to satisfy certain criteria, including having to be unemployed, to have recently lost a job, to be receiving government support payments, to have lost 20 per cent or more of their working hours, or to have lost Continued on next page
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