It will be over 30 years before the long-run impacts of the Government’s COVID-19 hardship early release superannuation regime are fully felt with the vast majority of people who utilised the scheme aged under 45 with average age being 38.
This reality has been confirmed to a Parliamentary Committee at the same time as some members of the Government have been canvassing allowing people to opt out of the next series of scheduled rises in the superannuation guarantee and to take them as a pay rise.
The proposal runs counter to some suggestions that the Government should use its May Budget to provide tax concession incentives to superannuation fund members who took hardship early release to encourage them to top up their accounts.
Data provided to a Parliamentary Committee has confirmed that around 60% of those who took early release superannuation were aged between 20 and 45 with those aged between 33 and 45 leaving in the order of about $47,000 in their superannuation accounts after drawing down an average of just under $9,000.
A number of funds have estimated that the average age of people drawing down on the early release scheme was approximately 38, meaning that, based on a retirement age of 67, they have another 30 years to make up the shortfall.
What is already known is that around 5% of those who utilised the early release scheme emptied out their superannuation accounts, but the majority of those who were found to have emptied out their accounts were aged under 25 and had low balances.
A number of Government backbenchers have continued to ramp up discussion around the suggestion that people should be allowed to take wage increases in lieu of a higher superannuation guarantee with NSW Liberal Senator and former Financial Services Council (FSC) policy director, Andrew Bragg, suggesting it puts people in the driver’s seat.
Speaking during a radio interview, Bragg claimed that if people had more super they would, by definition, have lower wages.
“So what a proposal like this will do is put the people in the driver's seat so they could decide they want to have more super or want to have more take home pay today,” he said.
The commentary around people opting to take pay rises instead of a higher superannuation guarantee follows on from strong Federal Opposition criticism of Victorian Liberal back-bencher, Tim Wilson, who encouraged people to make use of the early access superannuation regime to help fund home ownership.