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Rebuilding super savings after early access

By Andrew Yee
October 16 2020
2 minute read
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Rebuilding super savings after early access
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The early release of superannuation (ERS) scheme has proven to be a short-term lifeline for many lower- to middle-income-earning Australians. However, many of those who have accessed the scheme will be back to the drawing board in sufficiently saving for a comfortable retirement.

With parts of the country remaining in lockdown and countless businesses teetering on the brink, Australian workers have turned to the federal government’s ERS scheme in their droves. In fact, an estimated 3 million people have accessed the scheme in some form, whether it be their entire superannuation balance or a portion of the $20,000 limit ($10,000 up to 30 June and a further $10,000 from 1 July to 31 December). 

While a third tranche of the ERS has been ruled out, some $42 billion has been wiped from super balances already, with more to flow out of funds until the second and final tranche ends.


To be eligible, those applying need to satisfy certain criteria, including they must be unemployed, have recently lost a job, be receiving government support payments, have lost 20 per cent or more of their working hours, or have lost 20 per cent or more of their turnover as a sole trader. 

While the integrity of the system has been questioned by some who argue it’s too easy to access, the fact remains that many who require this assistance are low- to middle-income earners who legitimately need cash flow amid times of such economic stress and hardship.

For people who have drained their super accounts, while the road back to financial security is long, it’s never too late to implement a financial plan that will maximise their nest egg come retirement. 

For those Australians faced with rebuilding their super balances, there are a number of strategies to consider when maximising contributions, including:

  • Make a concessional contribution
    • Up to $25,000 can be contributed each year from employer contributions as well as salary sacrifice and member concessional contributions.
  • Utilise unused concessional contributions cap over five years (assuming the super balance is under $500,000)
    • Since 1 July 2018, people could start accruing their unused concessional contributions cap and carry them forward to future years. This means if people don’t use the full amount of their contributions cap in a particular year, they can carry forward the unused cap amount and take advantage of it up to five years later.
  • Make a non-concessional contribution
    • Up to $100,000 per annum or $300,000 brought forward over three years can be contributed on a non-concessional basis. The cap will be indexed in line with the concessional contribution caps.
  • Consider a spousal super contribution
    • People can make voluntary contributions to their spouse’s super. If the spouse is on a low annual income, there may be a tax offset. These contributions count towards the non-concessional cap.
  • Take advantage of the government super co-contribution
    • Low- or middle-income earners who make a personal (after-tax) contribution to their super fund can also access the government co-contribution up to a maximum amount of $500.

Further to these measures, people who have accessed the ERS scheme should familiarise themselves with their super fund of choice, and carefully read the Product Disclosure Statement. 

In its recent budget announcement, the federal government addressed this by clamping down on poor-performing super funds and strengthening regulations that compel funds to act in the best interest of the member. One measure announced is the development of a new online tool called YourSuper to help people choose an appropriate fund.

Super savings can be rebuilt quicker by simply switching to a low-cost fund, or one that incorporates low administration and investment fees, high past performance, and that adopts an appropriate investment strategy. 

When choosing an investment strategy, super fund members need to consider factors such as their age, appetite for investment risk, and how long it will be before they reach retirement age. 

This should also be the time when people consolidate any unused super accounts, if they haven’t done so already.

Importantly, the value of professional, qualified financial advice during these times shouldn’t be underestimated.

By Andrew Yee, director of superannuation, HLB Mann Judd Sydney