Hundreds of thousands of coronavirus-affected Australians have flocked to cash out their superannuation in the new financial year, with most of them being repeat applicants.
The number of applications to dip into their super a second time has hit 346,000 in the first five days of July, new data from the Australian Prudential Regulation Authority showed. Those making a repeat application requested an average of $8,904.
Overall, $29.3 billion worth of super withdrawals have been approved to 2.54 million workers, separate data from the Australian Taxation Office indicated. This has exceeded the Treasury’s projection that $29 billion worth of super would be accessed by 1.7 million fund members. However, analysis from Industry Super Australia suggests that the figure could soar above $40 billion.
More than $19 billion has been paid since the scheme began on April 20, with payments averaging at $7,511.
Those on JobSeeker payments and employees whose working hours were cut by at least 20 per cent due to COVID-19 were able to apply to access $10,000 of their retirement savings between April 20 and June 30. The second tranche of the scheme is open between July 1 and September 24, allowing many a second chance to dip into their nest egg.
The Association of Superannuation Funds of Australia (ASFA) predicts that the number of applications in the second round may nearly match the take-up seen before July 1.
More than half a million claims for super withdrawals were received between June 29 and July 5, 165,000 of which were first-time applications.
As many started the new fiscal year by planning their personal finances, the requests received in the week to July 5 quadrupled from the week prior, where 127,000 applications were recorded.
Close to $1 billion of payments have been handed out to workers in the week to July 5 alone.
Superannuation a financial lifeline for struggling Aussies
Treasurer Josh Frydenberg told 2BG News last week that super withdrawals have “put people in a better financial position overall”.
“We have some ABS payroll data that shows over 55 per cent of the spending from that $10,000 that has been early accessed has gone towards discretionary items that the people need, including paying their rent, and over 30 per cent has gone to paying loans,” he said.
More than 15 per cent of working Australians are expected to dip into their retirement savings, according to ASFA.
Those living in states where tourism industries have taken a hit due to COVID-19, including Queensland, Western Australia and the Northern Territory, have made more claims to access their super than other states.
ASFA chief executive officer Dr Martin Fahy said superannuation has played a key role in helping Australians in financial distress during the pandemic.
“Without superannuation, the great bulk of Australian workers would not have had any significant financial assets to draw upon during this time of economic adversity,” he said.
Five to 10 per cent of members had no or very low super balances after accessing their nest eggs.
“The erosion of retirement balances through the early release scheme reinforces the need to move as soon as possible to a superannuation guarantee rate of 12 per cent in order to provide adequate retirement savings for individuals, particularly women and younger Australians,” Dr Fahy said.