The early release of superannuation scheme has added tens of billions more to the Aged Pension, heaping pressure on future governments to hike taxes or cut the pension, according to Industry Super Australia (ISA).
ISA said if the Government announced a third tranche of the scheme in the 2020 Federal Budget tonight, Australians would be “forced to pay tens of billions more in taxes and suffer lower investment returns”.
It noted that its analysis showed that for each dollar taken out of super early, the taxpayer paid two and a half times that amount through higher pension costs and even after receiving higher pension payments individuals were still tens of thousands worse off.
ISA chief executive, Bernie Dean, said: “This emergency scheme provided funds to many at an uncertain time but has now fulfilled its purpose and must come an end, the long-term cost is just too great.
“Extending the raid on super will slug young Australians with a great big new tax to pay for a bloated future pension, drag down investment returns and will shove more Australians towards poverty in retirement.
“Workers should no longer be asked to sacrifice their future to prop up the economy now, there are other levers the government can pull to stimulate spending and get funds to people who need it.”
ISA said it was time to return super’s policy setting to its “normal rules” and that existing hardship provisions were more appropriate to get funds to members who had fallen on hard times.
ISA also pointed to a UMR poll that said 70% of Australians wanted the early release scheme to end as the economy began to recover.