SYDNEY, Australia – According to recent data, the superannuation early release program has reached 33 billion dollars super withdrawals among thousands of Australians throughout the COVID-19 pandemic.
In the latest data released by the Australian Prudential Regulation Authority (APRA), super withdrawals have now reached the 33 billion dollar mark, as of September. For the recent week of September, there was an addition of 49,000 new super funds application requests, where 21,000 are repeat applications, and 27,000 are new applications. Throughout the week, there was a total value of 360 million dollars of superannuation payments, which is relatively lower than the previous week, with 380 million dollars of super withdrawals.
On a different note, these figures show a significant decline in superannuation withdrawals. In August alone, the lowest value of released funds from superannuation savings accounts was 600 million dollars. The highest super fund payments released was in July, reaching a whopping 6.2 billion dollars.
There are now about 4.4 million superannuation applications, including repeat applicants, serving over 3.2 million Australians. Among these applications, 98 per cent were already approved and paid, averaging 3 business days to process. On average, applicants withdrew 7,402 dollars, while repeat applicants withdrew 8,426 dollars.
During the COVID-19 pandemic, one scheme developed by the national government to aid the affected citizens is the early release of the superannuation funds for eligible applicants. In recent parliamentary hearings, the big four banks of Australia appeared before the House of Representatives Finance Committee to present their responses to the crisis. One of these banks’ enacted measures is the government-aided release of super funds for eligible superannuation savings account holders.
The Commonwealth Bank of Australia (CBA) presented over 170,000 processed requests to release the superannuation fund. These figures are on top of other billion-dollar loan deferrals, waived fees, interest cuts, and other bank and finance supports. Westpac has also presented a total of 1.68 billion superannuation early withdrawals for over 200,000 customers. Other efforts initiated by the bank included billions of relief packages and loan deferrals.
Like many countries hit by the COVID-19 pandemic, Australia is now facing the first-ever economic recession it has experienced in 29 years. Many of the global catastrophe’s adverse effects have plagued many citizens, and the government has been active in creating and legislating programs to assist the whole country. Many closed industries and canceled jobs urged by the pandemic restrictions, many Australians are left with financial struggles. One of the national government’s answers to this is the early release and withdrawal of the superannuation savings accounts.
Superannuation is a government-mandated scheme to ensure that the working citizens will have access to sufficient funds to support them throughout retirement. It is a payment required for the employers to pay on their employees’ “super” savings accounts on top of the regular income and other government-mandated contributions. The monthly payment given by the employers allotted for the employee’s superannuation depends on the employee’s regular hour payment and tenure. As per law, employers are mandated to pay the superannuation contributions on top of the salary and wages for employees:
18 years old and above, being paid 450 dollars or more in a month
under 18 years old, being paid 450 dollars or more monthly, and working more than 30 hours in a week
Employers’ superannuation payment should be 9.5 per cent of the employee’s ordinary time earnings, meaning the regular hourly amount that includes bonuses, allowances, paid leaves, and award payments. This contribution increases as the employee’s tenure also increase. Employees who own the superannuation savings accounts also can boost their accounts through personal deposits or additional payments, following an amount “cap.” The Australian Government can also help increase superannuation funds in some instances. The Australian Government also contributes super funds for the eligible low to middle-income earners.
However, access to the superannuation savings account is only allowed upon retirement or in some cases of emergency and special conditions. On regular days, Australians cannot just access their super funds as easily.
Even with the increase of superannuation withdrawals among Australians, agencies and experts projected that 50 per cent of retiring Australians by 2070 would already be “self-funded.”
Recent Rice Warner reports projected that almost 53 per cent of the current generation of workers will already be able to fund their retirements, working with superannuation contributions for another 50 years. Although these figures are still significantly higher than the self-funded retirees today with 31 per cent, the superannuation program is expected to result in a higher percentage of workers being able to fund their retirements.
Data shows that among all superannuation earners, the youngest generation of professionals is the most hit. As per the analysis of Industry Super Australia (ISA), workers who are just starting with their careers or those that are 35 years old or below, estimating to 395,000 workers, have already reached zero balances in their superannuation funds. These figures are still set to have gone higher after the second wave of super withdrawal applications opened.
APRA has also released data showing a 0.6 per cent quarterly drop in the super contributions in June, with almost two-thirds of 64 per cent of applicants withdrawing and spending their funds.
There are recent discussions between the Federal Government and industries to raise super contributions to 10 per cent this year and up to 12 per cent by 2025. However, according to Rice Warner, for a comfortable retirement for everyone, the super guarantee should be at least 15 to 20 per cent.