Accessing superannuation early should be approached with extreme caution and only as a last resort, Industry Super Australia (ISA) has warned.
ISA said for some members their short-term financial survival might rely on the ability to access the up to $20,000 from super the scheme allowed by the Government to alleviate financial stress stemming from impacts of COVID-19.
ISA said it would work with the Government to ensure the scheme was delivered successfully and without harming the country’s national savings pool.
“The Government has provided a significant program of wage stimulus measures, including increasing welfare support payments, which members should consider exhausting before tapping into their super,” ISA said.
ISA warned the scheme had the potential to increase the administrative burden on funds and coordination with government and the Australian Tax Office (ATO) would be vital to ensure it operated efficiently.
“The last thing anyone wants is for stressed members to face prolonged delays for access to their super due to administrative bottlenecks,” it said.
ISA said a 20-year-old who accessed the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance. A 30-year-old who accessed $20,000 from super now could lose about $100,000 when they hit retirement and a 40-year-old could lose more than $63,000.
ISA chief executive, Bernie Dean, said: “Members should tread carefully and only think about cracking open their super after they’ve taken up the extra cash support on offer from the government – super should be the last resort given the impact it can have on your retirement nest egg.
“Members need to know that taking your super now is like selling a house at the bottom of the market – you’ll lose money you would probably claw back overtime.”