The Australian Business Review
9 June 2020
Gerard Cockburn – Business Reporter
Billions of dollars continue to be leached from Australian super funds as early withdrawal requests near two million.
The latest figures released by the Australian Prudential Regulation Authority show $13.5bn has been drained from the country’s near $3 trillion retirement pool, by members requesting hardship payments due to COVID-19.
As at May 31, 1.96 million Australians had lodged withdrawals requests with the Australian Taxation Office, for an average payment of $7473.
The regulator’s weekly statistics highlight that the scheme has still been paying out more than $1bn per week, following the initial $8bn rush to access funds in its first week of operation.
In the week ending May 31, $1.3bn was paid out to account holders, while the previous week had $1.6bn withdrawn. The week ending May 17, also experienced a $1.6bn.
The early release of super scheme was implemented by the federal government in April, as a support measure to assist Australians who have been affected by the economic downturn induced by the pandemic.
People that have become unemployed or experienced a reduction in working hours are able to access up to $10,000 this current financial year and the 2021 financial year.
Liberal Senator Jane Hume said the estimated total payment figure from the ATO stands at $16bn.
“The early release of super is projected in total to be only around 1 per cent of Australian superannuation assets,” Ms Hume said.
“While it’s confronting to see so many Australians in hardship, it’s been pleasing to see the money flowing to people who really need it.”
Ms Hume noted if the scheme was not implemented, people facing financial hardship would be forced into more expensive forms of financing such as credit card or personal loan debt.
Data from APRA showed 95 per cent of claims were being paid within five business days, while the median processing time is 3.3 days.
APRA said it is contacting funds which are not paying members in the recommended five business days turnaround period.
Members of major industry funds continue to make up the bulk of withdrawal requests, as a large proportion of members are employed in sectors that were significantly impacted during the shutdown.
AustralianSuper, Hostplus, Sunsuper, Rest and Cbus constitute $6.5bn of the total funds paid out to members.
AustralianSuper has paid out $1.8bn to 240,455 members, the largest of any fund. The average request from an AustralianSuper account holder is $7,473.
Sunsuper has received 206,899 withdrawal requests, already handing out $1.4bn to approximately 195,000 members.
Hospitality and event focused fund Hostplus dished out $1.3bn to more than 180,000 members, as at May 31.
Approximately 3 per cent of funds under management have been withdrawn from Hostplus.
$1.2bn has been paid out by retail workers industry fund Rest, while $764m has been sapped from Cbus.
Rest chief executive Vicki Doyle said the major fund is “well placed” to cope with the large outflow of funds, but noted ongoing uncertainty caused by COVID-19 will impact its long term investment capabilities.
“It’s important that a short term approach to the current crisis does not create a longer term crisis for Australia’s retirement savings,” Ms Doyle said.
“If members’ super is regularly called upon to provide short-term fiscal support to the economy, it changes the way we invest on behalf of our members.”