Industry Super Australia (ISA) has produce new research claiming that up to 40% of applicants for the Government’s $10,000 hardship early release superannuation package may actually prove to be ineligible because they have not actually been adversely financially impacted by COVID-19.
ISA retained polling firm UMR with the result showing that one million people who had not been financially impacted by the coronavirus shutdowns were intending to access their super early.
The survey was conducted in the first two weeks of April.
ISA claimed this high number of ineligible claimants would not only undermine the policy intent of the scheme but could slow down the processing of applications for those who urgently need financial support.
To qualify for the government’s early release of super, claimants must be eligible for a qualifying social security benefit, have lost their job, or had a reduction of hours or if a sole trader turnover, by 20% or more.
It said about 30% of the 1100 people polled who were under 65 with a super balance, said they were either very likely or likely to take up the scheme and that, on average they said they would take out about $13,500 each – the scheme allows for $10,000 now and another $10,000 after July 1.
“But worryingly 40% of those who said they intend on making a claim had not yet been financially impacted by the Coronavirus shutdown,” ISA said.
Of those who are very likely to claim 46% said they were still in paid work and their hours had not been reduced due to the COVID-19 economic shut down. And 40% of those very likely to take up the scheme were in households that earn more than $104,000 a year.
It said that 29% of those very likely to claim said they were worried their job might be impacted at some point, indicating they were accessing the scheme to build up a savings buffer.
Treasury has estimated 1.5 million will take out $27 billion from super but the polling and other ISA analysis suggests the take-up could be far higher – in excess of $40 billion.
The ISA said the results should prompt urgent action by relevant regulators including the announcement of random checks on claims to deter inappropriate applications and real time monitoring of claim volumes.
“The ATO should also continuing issuing clear warnings that anyone flouting eligibility rules could be penalised,” it said.