Aussie super withdrawals hit $33 billion

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on September 14, 2020
Aussie super withdrawals hit $33 billion

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Withdrawals made through the COVID-19 superannuation early release scheme have hit the $33 billion mark, the latest data shows.

The Australian Prudential Regulation Authority's latest data for the week to 6 September shows another 49,000 applications were made to super funds, with 27,000 being new applications and 21,000 repeat applications. 

The total value of payments during the week was $360 million, down from the previous week's low of $380 million. 

This is a further sign that the number of withdrawals is slowing. As at 16 August, the lowest weekly withdrawal amount at the time was $600 million, after withdrawals peaked at $6.2 billion in the week to 12 July. 

[Read: Aussies are taking more from their super than they're putting in]

The total number of applicants now sits at 3.2 million Australians, who have made 4.4 million applications when factoring in repeat applicants. 

Almost all (98%) of applications have been paid, taking an average of 3.3 business days to receive their super. 

The average applicant withdrew $7,402, or $8,426 among repeat applicants. 

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                50% of Aussies to rely on the pension by 2070

                New projections show more than half of Australians retiring by the year 2070 will be "self-funded" in retirement. 

                Projections in a new report by actuaries Rice Warner shows almost 53% of the latest generation of workers just starting out in their current professions will be able to fund their own retirement, despite earning superannuation for roughly 50 years. 

                This is still more than the 31% of self-funded retirees today, but the figures should be higher given the purpose of superannuation is to reduce reliance on the aged pension. 

                This is a timely report considering some of the statistics unveiled about the often-divisive early super access scheme. 

                Younger and low-income workers have been among the most affected, with analysis by Industry Super Australia (ISA) estimating 395,000 people under the age of 35 have completely eroded their super balance to $0, which "could lead to a future generation languishing on the pension". 

                These figures were before the second round of applications opened as well, meaning the numbers could well be higher by now. 

                "Those early contributions are like yeast, without them you're left with a much flatter nest egg," Industry Super Australia chief executive Bernie Dean said.

                "To have hundreds of thousands wiping out their savings midway through their life is a tragedy waiting to happen and it will affect everyone.

                More recent data from APRA found there was a quarterly fall in super contributions (-0.6%) in June 2020 for the first time ever, and almost two-thirds (64%) of total applicants have used their withdrawals on discretionary spending.

                [Read: How much do you need to save to retire comfortably?]

                Rice Warner executive director Michael Rice said there will always be people who can't save enough to retire, either through "illness, unemployment or bad luck". 

                “The SG [super guarantee] would need to be between 15% and 20% to give everyone a comfortable retirement and not have any age pension," Mr Rice told News Corp. 

                "That looks impossible, as industry and the Federal Government arm wrestle over whether to lift compulsory super to 10% next July and then up to 12% by 2025."

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                William Jolly joined as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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