Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

Early access to super ‘a last resort’, says industry body

Bernie Dean
Adrian Flores
24 March 2020 — 1 minute read

An industry body believes that members seeking to access their superannuation early should do so “with extreme caution and only as a last resort”.

The government recently announced individuals in financial stress as a result of COVID-19 will be allowed to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21.

They will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020, and will also be able to access up to a further $10,000 from 1 July 2020 for another three months.

Advertisement
Advertisement

However, Industry Super Australia said the scheme has the potential to increase the administrative burden on funds, and co-ordination with the government and the Australian Taxation Office will be vital to ensure it operates efficiently.

It also noted that the last thing anyone wants is for stressed members to face prolonged delays for access to their super due to administrative bottlenecks. 

“For some members, their short-term financial survival might rely on the ability to access the up to $20,000 from super that the scheme allows,” ISA said.

“But accessing superannuation early should be approached with extreme caution and only as a last resort.”

ISA said its analysis shows that a 20-year-old who accesses the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance; a 30-year-old who accesses $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.

It also said that 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.

Industry Super Australia chief executive Bernie Dean said some members will have lost their jobs or had their hours dramatically reduced.

“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,” Mr Dean said.

“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.”

Adrian Flores

Adrian Flores

Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at This email address is being protected from spambots. You need JavaScript enabled to view it..

Early access to super ‘a last resort’, says industry body
bernie dean smsf
smsfadviser logo
join the discussion

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of SMSF Adviser.

Read more

Latest poll

Have your clients shown any concerns to you about the coronavirus?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.