Australia's "early release" program, which gave Australians hurt by the pandemic access to their superannuation fund retirement accounts, proved an efficient means of providing urgently needed assistance but came at a heavy cost for those who tapped their savings, according to the Association of Superannuation Funds of Australia.
Participants were allowed to withdraw up to A$20,000 ($13,972) from their super fund retirement accounts under the program.
Over a very short period of time, super funds were able to distribute A$38 billion to roughly 3 million Australians who applied for early release during the first year of the COVID-19 crisis, an ASFA analysis released Thursday said.
That amounts to just a bit more than 1% of the Australian superannuation system's A$3.4 trillion in retirement savings.
But applicants who decided they needed to take advantage of the opportunity "paid a relatively high price for the monies released, both in terms of the impact on eventual retirement savings and in taking a benefit when investment markets were temporarily well down," according to an ASFA news release.
ASFA's analysis said nearly 1 million Australians out of a total of 17 million "closed or largely cleaned out their superannuation account as a result of early release payments."
Meanwhile, 30-year-old Australian employees who withdrew the A$20,000 maximum in 2020 would find they have A$43,032 less in their super accounts at 67 than they would have had if they had not taken advantage of early release, ASFA's analysis showed. The corresponding gap for 40- and 50-year-olds would amount to A$35,024 and A$28,506, respectively.
Glen McCrea, ASFA's deputy CEO, in the news release said "while superannuation was able to do much of the heavy lifting by distributing payments to people quickly in the early days of the COVID-19 pandemic, it's important that we recognize the detrimental impact that this has had for the retirement savings of millions of Australians."
"It's more important than ever that we legislate the objective of super to ensure that Australians' savings are preserved to support a dignified lifestyle in retirement," he said.
