Nearly 400,000 young Australians were fired early in the COVID-19 crisis, raising fears that they will have to rely on retirement upon retirement.
In March, the government changed the super rules to give Australians who lost their jobs or hours cut access to $ 10,000 super and another $ 10,000 from July 1.
To date, an estimated 395,000 people under 30 have already eroded their full super balance, according to a new analysis from Industry Super Australia.
There was such a rush to access the early release arrangement of the Morrison government that it crashed the ATO website this week.
The ISA estimates that around 480,000 Australians had discontinued their super accounts on June 14, the vast majority of which were young adults.
A 25-year-old who now shuts down $ 10,000 could retire $ 49,000 less, a 35-year-old could lose up to $ 34,000 and a 45-year-old could lose up to $ 23,000.
Experts fear that hundreds of thousands of young Australians who have cleared their accounts to help keep their heads above water during the coronavirus crisis should rely on their retirement when they retire (photo, a young woman turns up at Sydney Airport on Thursday with a mask worn)
Industry Super Australia (ISA) new analysis estimates 395,000 people under 35 wiped out their retirement (pictured, people queuing outside a Melbourne Centrelink office as a lockdown hit in March)
The figures are based on analysis of Australian tax authorities’ data on accounts with a balance of less than $ 10,000 and Treasury statistics on the age distribution of those who applied for the scheme.
On average, about 15 percent of Australian workers have early access to their super.
Three states were above the national average: Queensland at 20 percent, Northern Territory at 19 percent, and Western Australia at 16 percent. Only 8 percent of the ACT employees had access to their super early.
WHO CAN ACCESS COVID-19 EARLY FROM SUPER
Citizens and permanent residents
Citizens and permanent residents can apply for access to: $ 10,000 from their super until June 30 and another $ 10,000 from July 1, 2020 to September 24, 2020.
Applicants must meet one or more criteria:
- You are eligible for jobseeker’s allowance, jobseeker’s youth allowance, parental allowance (including single and partner allowance), special allowance or household allowance.
- On or after January 1, 2020 either: you have been made redundant, your working hours have been reduced by 20% or more, your company has been suspended or your turnover has decreased by 20% or more.
SOURCE: AUSTRALIAN TAX AGENCY
Demand for the scheme already exceeded government expectations that approximately 1.65 million Australians would withdraw $ 27 billion.
More than 2.2 million have already withdrawn a total of $ 18.5 billion, each taking in an average of $ 8,000.
The trend seems to continue in the next phase, with the ATO website crashing earlier this week as thousands flocked to complete the second round of applications.
The site shrank within half an hour of the new fiscal year, with users reporting an outage on Wednesday morning at 12:14 PM.
While industry super funds have supported the scheme’s goal of getting money for those in financial distress, ISA reiterates the call from members to access the funds only as a last resort.
It is surrounded by disturbing reports that the money is being used to gamble, buy alcohol and other discretionary expenses.
“To have hundreds of thousands wipe out their savings halfway through their lives is a tragedy that has yet to happen and will hit everyone,” said ISA director Bernie Dean.
“Every Australian deserves a good life when he retires, not just retired.”
Before the second installment opened, Mr Dean warned young Australians that early withdrawals could also ‘wipe out’ their lives and income protection coverage if your super balance goes low.
Applications for access to super early fiscal year 2020-21 close on September 24.
Australians can access their super only if they are unemployed, eligible for a JobSeeker benefit, fired since January 1, or have their working time reduced by at least 20 percent.
A barista working in a Sydney cafe on July 1 (photo), concerned that young people have withdrawn too much of their supers to help during the coronavirus pandemic
Last month, the government warned that it would take action against anyone attempting to abuse the system.
Those who provide false or misleading information may face fines in excess of $ 12,000 for any false and misleading statement.
The MoneySmart website advises Australians to seek government help and talk to their bank or lender about potential financial aid before diving into your super.
THE ADVANTAGES AND DISADVANTAGES OF EARLY ACCESS TO YOUR SUPERANNUATION
- Dipping your pension can provide support if you urgently need financial help as a result of the coronavirus crisis
- Money accessible through this scheme is tax-free
- Money that is now accessible can now be more valuable than when you retired
- Depending on your age, withdrawing money now can cause you to miss more than double that amount by the time you retire, because withdrawn money does not yield compound interest
- A 25-year-old who now shuts down $ 10,000 could retire $ 49,000 less, a 35-year-old could lose up to $ 34,000 and a 45-year-old could lose up to $ 23,000.
- If you withdraw money, you will likely see cashouts at the bottom of the market
- The problem is even more problematic for women, who retire on average with 40 percent less super than men
- If you withdraw your full super balance or don’t have enough to pay premiums, it could affect your life, total permanent disability, or income insurance