Superannuation members switching their funds to cash is a bigger issue than members participating in the early access to super scheme, Assistant Minister for Superannuation, Financial Services, and Financial Technology, Jane Hume.
Speaking on a Bloomberg webinar today, Hume said the early access to super scheme for members suffering financial hardship due to the COVID-19 pandemic had not changed the landscape of super but that a significant shift had been from members switching their super to cash.
“Funds haven’t had a real problem with paying out this money and the Australian Prudential Regulation Authority [APRA] identified before it began that it shouldn’t have much of an impact on the system overall,” she said.
“What has been a significant shift for super funds has been the money kept in super and converted to cash from those more aggressive assets. This has been a logistical exercise for funds to manage. The early access scheme might be a nice excuse [to say the landscape has changed] but it hasn’t changed the face of super system overall.”
She said one-third of super members that made withdrawals from the scheme were aged under 30 and had “many years in the workforce to find opportunities to recontribute to superannuation”.
“From the government perspective it’s important to create a vibrant and flourishing economy that provides jobs so people can make contributions,” she said.
Hume said there were numerous ways for people to make contributions when times got better such as catch up contributions, concessional contributions, and bring forward contributions.
She said people understood the ramifications of taking $10,000 out of their superannuation and were now looking at how to make it back up in the future and this was “a good thing because the super industry had complained about disengagement in super for the last 28 years” and this was a step forward towards greater engagement from members.