The controversial coronavirus measure allowing pandemic-affected Australians early access to retirement savings ended on New Year’s Day.
Around 3.4 million Australians ‘sucked’ close to $36 billion from their nest eggs in a bid to stay afloat during the pandemic.
And while that figure may seem large, it’s still below Treasury estimates by around $3 billion.
Implemented in the second COVID-19 economic stimulus package, the early access scheme aimed to help Australians suffering financial hardship caused by the pandemic, allowing them to access $10,000 from their super in the 2019/2020 financial year, and a further $10,000 in the next financial year.
The scheme ended on 1 January..
According to an ABC report, Treasury initially estimated $29.5 billion would be accessed prior to extending the scheme to the end of 2020.
By the end of June 2020, more than $20 billion had been withdrawn, prompting Treasury’s $42 billion estimation at the end of 2020.
Use of the scheme slowed in the second half of the year as states returned to some normalcy.
Once the early access scheme was made available, it didn’t take long for people to dig in. An ABC report in September revealed that more than a quarter of people who accessed superannuation early made their decision within a day.
Some say those who took advantage of the scheme to meet short-term financial needs will suffer in the long run, having sacrificed long-term compound interest on their balance.
And there were those who may have defrauded the scheme.
Only those who were unemployed, eligible for some welfare payments or had their hours or sole trade income reduced by 20 per cent were eligible to access the scheme.
That didn’t stop others who were not eligible from accessing to their super balances.
“The ATO understands that some applicants may have made a genuine mistake,” said an ATO spokesperson.
“In this instance, the ATO will work with them to help resolve their position.
“Only in serious cases where an applicant has deliberately applied knowing they were not eligible will the ATO apply penalties.”
If it turns out an ineligible applicant has raided their savings, the tax office will deem the amount withdrawn as assessable income.
The Sydney Morning Herald says pressure is mounting on the federal government to review some of the economic policies introduced during the pandemic, including giving workers access to $20,000 from their retirement funds.
Senator Gerard Rennick wants to keep the early access super scheme permanently. So, too, do Liberal MPs Dave Sharma and Tim Wilson, both claiming that the scheme had been “enormously successful”.
Mr Wilson wants a new, permanent early access scheme to let first-time buyers use their retirement savings to buy a home.
His tweets on that topic last week attracted criticism.
“Aiming to buy a first home and struggling to save the deposit?” he tweeted.
“For 4 more days you may be able to access your super savings now to bring a purchase forward: earlier & cheaper.”
Treasurer Josh Frydenberg said in March 2020 that the measure would “allow those Australians in financial stress as a result of the coronavirus to access more of their own money in superannuation”, but maintains that the early access to superannuation, JobKeeper and the JobSeeker supplement were only ever temporary programs.
“Our economic recovery plan is designed to rebuild our economy and we’re seeing that through the creation of 734,000 jobs in the last six months, with fewer businesses and their employees in need of JobKeeper and other temporary economic support,” he said.
Early access to super may still be granted in extreme cases such as being unemployed for six months and being unable to meet living expenses.
Do you think we should be able to access our super whenever we need it? How do you rate the federal government’s economic policies during the pandemic?
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Related articles:
https://www.yourlifechoices.com.au/age-pension/early-super-access-and-the-pension
https://www.yourlifechoices.com.au/retirement/retirement-income/challenges-to-pensions-and-pensioners
https://www.yourlifechoices.com.au/finance/news-finance/covid-making-us-financially-smarter
