ISA survey points to early access super rorters

21 April 2020

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.

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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.




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The sole purpose of super is to fund our retirements. So how does a trustee justify spending these funds on this ridiculous research as meeting the sole purpose test? Or is this them trying to put pressure on Gov'ts and members to not withdraw their funds? Please ISA, explain why this information helps your members?????

This 'report' is just more typical obfuscation and hurdles they're throwing up to avoid the real issue that their portfolios are skewed & screwed, and they're panicking.

Agree with Wondering Man's comment. ISA does nothing without the sole purpose of pure self interest and preserving their cash cow, as opposed to member's interests.

ASIC you should be ashamed of what your inaction have wrought.

asic don't understand how the industry even operates. if you met some of the people that work there you would be gobsmacked total retards and idiots.

Nothing like a bit of self interest to get the union funds to use more of their members funds on useless research.

The ISA will be under immense pressure from the Trade Unions to stem the flow.
The less monies held in Industry Super funds will mean less money siphoned to the unions via the payment of third party Directors Fees which totaled a staggering $18,438,516 between 2013/14 to 2016/17 with the CFMEU being the biggest recipient.
In addition to the 23 union organisations that shared this pool of money, an additional $2,076,756 was distributed to industry organisations from the re-direction of Directors fees.
Industry associations such as Bowls Qld, Live Performance Australia, Christian Schools Australia, Screen Producers Australia and the Association of Independent Schools NSW !!!!!!
These have been the beneficiaries of Directors fees from Industry Super Funds being redirected to organisations of their choosing.
The distribution of all third party payments from Industry Super Funds via Directors fees totaled a massive $26.14 Mill between 2013/14 and 2016/17, with the vast majority of 70% going straight to the Trade Union movement.
So, the Directors of the Industry Super Funds and their Trade Union counterparts will be very, very concerned how this will all look following a significant volume of monies leaving the funds.
The re-direction of Directors fees to other organisations at this level is a rort and is the manipulated and deliberate model used to get members money into an organisation that is favoured by that Director, including unions that many of those super members may not be members of and may never be members !
I believe it is time this is investigated fully.

ASIC, are you listening? How come there's only crickets...?

Irresponsible use of members money and a bit 'smelly' if you ask me.

Why are industry funds surprised that so many members want to bail at the first opportunity? The vast majority of members are in these funds through no choice of their own. They are not engaged, they are paying for insurance they didn't agree to, most have never agreed to the fees nor chosen their investment options. These members want their money instead of paying it to them, they are wasting members money on trying to make it harder for them to get it. If they don't smarten up and start acting in their members best interests soon, they will lose their social licence very quickly.

Thats what you get with tick a box !

Interesting that Morrison suggested TWU Super bail out Virgin because it employs many TWU members. I think this highlights that when union super funds routinely breach the sole purpose test with impunity year after year after year, it becomes normalised. Sorry Prime Minister, union funds breaching the sole purpose test might have become normal, but it's not legal. Never has been.

The Prime Minister suggest to the trustees of a super fund to bail out an airline 90% owned by only 5 company shareholders, 2 of which are Chinese owned at 40% combined and 2 of which are other airlines at 41% combined in this current climate when a 41% shareholding by 2 organisations may well be also under significant pressure to survive anyway ??......and this would be in the best interest of the TWU Super members in regard to their retirement accumulation ?
What if the trustees thought this was a great idea in order to protect jobs and then the company failed anyway leaving a massive debt or 2 major shareholders plunged into liquidation?
I think this suggestion must have been for the sole purpose of the Govt avoiding any form of commitment and suggesting that putting members retirement monies in would be a much better idea !!

I'm sorry, but breaking off a relatively small amount of super to create a modest personal savings buffer is prudent, not irresponsible. Lecturing members about compound interest and the long-term value of their retirement nest egg is pointless when they either can't pay the bills, or they foresee serious cashflow problems ahead (and all of the stress, anxiety that comes with that). Rather than behaving like a true, dependable friend of the working man and woman, ISA are instead throwing up obstacles, crying foul, and pointing fingers at members who they feel are less deserving than others. ISA need to stop sulking and just get on with the job of providing certainty and comfort to their members in what are unprecedented, challenging times.

Yep. Very well said!

Finally some commonsense. Good comment.

Compare the Pear........with Apples

You know what, I might just think outside the box for once and take a bit of a risk myself. I will take full advantage of this once in a lifetime opportunity to take out $20k out of my Aust Super fund tax free. I am self employed and can satisfy the withdrawal criteria. I will then borrow another $20k out of my home loan at 2.69% interest pa. I get that rate from the bank as I am geared less than 60% LVR on my home loan and better than a margin loan. I will then invest the $40k in a variety of growth assets with particular attention paid to fully franked assets. I don't expect too many dividends in the current climate nor much growth but I may be able to double this in the long term. I will claim the (minimal) bank interest as a tax deduction as well while I am at it. May even borrow more, who knows, the market is cheap. Oh and I might re gear it in the future again.

If this is a long term strategy and you want to invest in fully franked shares why don't you just leave the portion in super and buy the same shares within the superannuation environment and enjoy a reduced tax rate and then withdraw it tax free when you retire? Still a good idea to borrow to invest right now outside of super, loans are cheap and there is a lot of value out there atm. Just remember there are plenty of super products out there that will let you do what you want, just within a different tax environment which may be beneficial to you.

Jamberoo I love ur comments. And all the others as well. Super should be voluntary. I am making that the legacy from the death of my son in 2018. 6/3/20 I received a letter from REST saying the Trustee stood by his decision to give 50% or $215k to a girl my son knew for around 2 yrs when he had a nomination and a Will. The Trustee said he couldn't pay much credence on them because they were made before he met her. No marriage, no engagement, no registering of a relationship, no children biological or step, no shared lease or mortgage, no shared bank accounts, bills. The trustee said this was a significant life event for him. I would have thought when he was diagnosed in 2012 with Muscular Dystrophy that was a SLE not when a girl came over for sex and stayed on and off. His Estate cost his father and I $109,000 which has left me with little left. There has to be a better system than this Super. I am just finishing a blog to put up soon and a petition calling for Super to be voluntary, money given back to account holders, means a 9.5% pay increase for workers, no tax breaks for high income workers who will save anyway and save the Govt $45B and thereby able to increase all pensions. And you have control of your money again.

Sorry about your son, but to me this highlights exactly why people should seek financial advice. There is no way the gov't will make super voluntary. Instead you should be advocating people seek quality financial advice from a registered Financial Adviser.

What a terrible and unjust outcome this is.
This is simply not right.
I am assuming his Nomination of Beneficiary was non-binding ?..or was the nomination to his Will and the Will was then challenged by the other party ?
How on earth has this Trustee determined there was a dependency, inter-dependency or significant relationship existing in this instance ?

It's a once in a lifetime opportunity. Preservation Age is 60 for the majority now. So here's an opportunity to take the money out and invest it, to create a lump sum that can be drawn down from ages say 55 to 60. I'd be taking it out and dumping it into some geared shares or using it for an investment property. Modelling that would be a better outcome then your existing super fund even at a 15% tax rate. Of course if you're buying a Jetski or spending it you're an idiot.

I hear what you are saying GT. This is not just about me. Do you think everyone can afford "quality financial advice" or that they even know that they need it? I would have thought to supply something to the masses you would have to "keep it simple stupid". I didn't know that Super wasn't covered by a Will. And thank you Customer. I also think this is terrible, unjust and not right and I will continue to fight it. It has happened to so many people that I have spoken to. Maybe I am just more angry and determined, maybe I have more time and able to write letters nonstop than others in this situation. It has caused me untold stress worrying about how I could keep paying after he died and this girl paid nothing. Not towards his funeral, plot, headstone, last gas bills, electricity etc. and was receiving Centrelink when he died. Just went home with her father the night he died and had on facebook she had sex with someone else 4 days after his funeral. It has all caused his father and I so much hurt. Yes Customer it was a non binding nomination, never changed from when he started work in 2003. Binding nominations came in in 2013 with REST but by then he had a Will (made Feb.2013) which I thought over ruled anything else and cemented the nomination he had on his REST account. She didn't contest his Will. That would have been harder to challenge than Superannuation with it's weak laws and I was told by a lawyer that REST lean towards de facto and financial dependents. I feel I must get this message out to the public. I have been told many times that "I didn't know that could happen" or "I didn't know Super wasn't covered by a Will" etc. If enough people sign the petition once I get it going, then politicians will have to listen and quite a few Liberal politicians are against Superannuation as it is now. Only the Labor politicians and the Unions will be screaming.
Thank you for your kind words.

I hear what you are saying GT. This is not just about me. Do you think everyone can afford "quality financial advice" or that they even know that they need it? I would have thought to supply something to the masses you would have to "keep it simple stupid". I didn't know that Super wasn't covered by a Will. And thank you Customer. I also think this is terrible, unjust and not right and I will continue to fight it. It has happened to so many people that I have spoken to. Maybe I am just more angry and determined, maybe I have more time and able to write letters nonstop than others in this situation. It has caused me untold stress worrying about how I could keep paying after he died and this girl paid nothing. Not towards his funeral, plot, headstone, last gas bills, electricity etc. and was receiving Centrelink when he died. Just went home with her father the night he died and had on facebook she had sex with someone else 4 days after his funeral. It has all caused his father and I so much hurt. Yes Customer it was a non binding nomination, never changed from when he started work in 2003. Binding nominations came in in 2013 with REST but by then he had a Will (made Feb.2013) which I thought over ruled anything else and cemented the nomination he had on his REST account. She didn't contest his Will. That would have been harder to challenge than Superannuation with it's weak laws and I was told by a lawyer that REST lean towards de facto and financial dependents. I feel I must get this message out to the public. I have been told many times that "I didn't know that could happen" or "I didn't know Super wasn't covered by a Will" etc. If enough people sign the petition once I get it going, then politicians will have to listen and quite a few Liberal politicians are against Superannuation as it is now. Only the Labor politicians and the Unions will be screaming.
Thank you for your kind words.

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