Dangers of accessing super early
More than half a million Australians have signed up to access to their superannuation early, new figures show.
A whopping 617,800 super fund members had registered for the early release of their retirement savings up until Wednesday, according to Australian Tax Office data.
This is a huge increase from 361,000 members just one week earlier.
Under the scheme eligible Australians impacted by the COVID-19 outbreak can access $10,000 of their super balance this financial year and another $10,000 next financial year.
But the Australian Institute of Superannuation Trustees head of advocacy Melissa Birks warned those wanting to dip into their super early to first check their balance and only do it as a "last resort".
"It is worth noting that some members will have less than $10,000 in their super so they need to be aware that withdrawing their entire balance will ultimately see their account closed and the potential loss of insurance where it has been provided," she said.
"It is also worth keeping in mind, that your personal circumstances may change over the next few months, particularly when the jobseeker payments come through in May."
Australians can start receiving money from their super funds from April 20.
Ms Birks warned you can only apply for one early release payment each financial year.
For instance you can't apply for $2000 now and then reapply for another $8000 before the June 30 cut-off for this financial year.
New independent research released by Industry Super Australia found despite significant falls to super balances because of the economic hits from coronavirus, about 58 per cent of Australians remained confident their super would recover over time.
ISA said there had been a 74 per cent increase in online searches for super in recent weeks.
They have just rolled out a new TV ad campaign reassuring members their super will bounce
back from the downturn and deliver strong long-term returns to build their nest egg.
During the Global Financial Crisis in 2007-08 savers who moved their money from an average balanced industry fund into cash were $4000 worse off after three
After one year they were $13,800 worse off, after five years $34,800 worse off and after seven years lost $46,000 of potential retirement savings.
ISA chief executive officer Bernie Dean said funds were looking after members "by protecting their nest egg and making sure it can grow again out the other side of this crisis."
Super fund QSuper said they have received thousands of member inquiries since the early release measures were announced and the average age of those requesting information was 47.
The fund's chief executive officer Michael Pennisi said members should understand the impact of withdrawing super now and the harm it could cause once they retire.
"Many Australians are hurting and we know there will be QSuper members who will need to apply for early release.," he said.
"We'll be here to support them by getting their money to them as quickly as possible and we'll be here for them when they are back at work to help them with strategies to rebuild their nest egg."
ACCESSING SUPER EARLY
• Can to be accessed from mid-April.
• Rules need to be implemented first before Australians can apply.
• Applicants must be unemployed or made redundant after January 1 or had their working hours reduced by 20 per cent or more.
• Sole-trader applicants must have had their business suspended or had a reduction in turnover by 20 per cent or more.
• No tax is to be paid on early-release amounts.
• Eligible Australians can access $10,000 this financial year and $10,000 next financial year.
• Applications can be done through the my.gov.au website.
Originally published as Dangers of accessing super early