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Early super withdrawals lower retirement balance by 15%
Both AustralianSuper and Aware Super have estimated that superannuation members who withdrew the maximum $20,000 using the early release to super scheme would be $77,000 worse off in retirement.
In answering questions on notice by the Standing Committee on Economics, the two super funds said the long-term impact on a 25-year-old of withdrawing $20,000 last year was that they would be $77,000 (15%) worse off at retirement.
AustralianSuper said this included the $20,000 withdrawn and $57,000 in foregone earnings on the $20,000.
The fund also noted the short-term impact for a member was the loss of investment earnings for the 2020/21 year.
It said on $20,000 this amounted to just over $4,000 based on the one-year return of 20.43% for the Balanced Fund.
According to Aware Super, the cohort that withdrew super from their accounts the most were those aged 36 to 45 (30.2%), followed by 46 to 55s (28%), and 26 to 35s (24.4%).
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This assumes the money withdrawn was burnt. If the money saved default on a mortgage then the value from that could well outweigh the lower super at retirement. Same if the money saved a business from going bust. The story is reading as Labor/Greens asking biased questions to score political points? And reads as fake news given for many the money was a life saver, so its only telling half the story. The reverse fake news article reports people where the money was critical, and they will be better off in retirement as they saved their home and/or business.
Funds may have gone against mortgage but they didn’t need to. Loans were to go on deferral. Super is a tax deducible contract with all society’s tax payers for the individual to save for retirement not an emergency ATM. If we want an ATM then no tax benefits and make it an ATM. can’t have cake and ...!
IF an ERS is ever allowed then need a means sets threshold. Otherwise we have private savings, from many least able to afford it, propping up collapsing economy caused by government shutdown which should be funded via the same governments support ie public tax payers money. This was fixed up via job keeper etc.. so the ERS should have then been dropped. Instead the economy was boosted via super withdrawals to the tune of $38B. small super accounts perhaps saved the economy?
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