Liberal Senator Jane Hume says it’s not up to the government to tell you how to spend your money, even if it’s funds from the early access to super scheme set up to help you through the COVID-19 crisis.
The scheme, which allows Australians facing financial hardship to access to a maximum $10,000 a year for two years from their super accounts, has come under fire after a report revealed some members had used the money for discretionary spending.
AlphaBeta Australia analysis of debit and credit card data of 13,000 people who withdrew an average of $8000 under the scheme showed that more than 60 per cent of spending was on discretionary items such as clothes, furniture, restaurants, cars and alcohol.
More than one in 10 people used the money to gamble.
Around 40 per cent of those who accessed their super early had recorded no drop in income.
Andrew Charlton, director at AlphaBeta Australia, claims the government’s scheme was flawed and the data showed that people were abusing the scheme designed to provide a lifeline for those struggling to pay essential bills.
Instead, he said, opportunistic people were destroying their retirement savings without realising the long-term cost of their decisions.
He claimed the scheme was poorly designed and should have tighter eligibility checks and income tests.
Senator Hume, the Assistant Minister for Superannuation, Financial Services and Financial Technology, has defended the controversial scheme, explaining that members can use the money however they see fit.
“The government isn’t in the business of telling people how to spend their own money. We don’t do that,” she said.
“In the same way we still pay a JobSeeker to a person who might spend it on cigarettes and beer.
“If people choose to take their own money and spend it on something that isn’t particularly helpful, that’s their business.”
According to Nest Egg, the senator claims that research showing how much early superannuation was wasted on discretionary spending was misleading and potentially overblown.
“(The statistics) came from an organisation that provides a budgeting tool, so you’re dealing with a sample of people who are in poor financial mismanagement anyway,” she said.
“I think it was terribly misleading and unnecessarily – dare I say, political – use of information about a really important and effective scheme.”
Senator Hume also took aim at super funds claiming that early access to superannuation is creating problems for the industry or will change investment strategies.
“They’ve made a mountain out of a molehill here,” she said.
“The amount that has been taken out for early release is less than 10 per cent of contributions that were made last year.
“There is no way that superannuation funds should have to dramatically adjust their investment strategies to account for such a small amount of money.
“The funds have had no real problems paying out this money.
“APRA identified before we began that it shouldn’t impact the system overall at all.”
The senator also confirmed that legislation increasing the superannuation guarantee to 12 per cent from 1 July 2021 will still go ahead.
“It has always been the government’s intention to increase the superannuation guarantee, and we haven’t deviated from that intention or that message,” she said.
“That said, I would not be surprised if we get a lot of pushback when that goes ahead next year – particularly from the business community, who [understands] that there is a limited amount of money out there to pay employees, and when you increase the superannuation guarantee, something has to give.”
Do you think the government has a right to tell people how to spend the money derived from schemes aimed at helping them get through a crisis?
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Related articles:
https://www.yourlifechoices.com.au/finance/superannuation/early-super-access-and-the-pension
https://www.yourlifechoices.com.au/finance/news/covid19-to-hit-retirees-hardest
https://www.yourlifechoices.com.au/finance/superannuation/apra-releases-early-super-data
