Key Federal Government back-benchers are claiming vindication after a senior Treasury official suggested Industry Super Australia (ISA) may have overstated the long-run superannuation balance effects of people taking early hardship access of up to $10,000.
The Government back-benchers including Victorian Senator and former IPA staffer, James Paterson and NSW Senator and former Financial Services Council policy director, Andrew Bragg, have highlighted testimony given to a Senate select committee by the Treasury’s head of retirement income policy, Robert Jeremenko.
Senator Paterson pointedly asked the Treasury official about the validity of ISA’s claim that a 30-year-old who withdrew $20,000 over the next two years would have $97,214 fewer dollars in retirement savings by age 67.
Paterson suggested that this figure was substantially higher than indicated by ASIC’s MoneySmart calculator.
Jeremenko said the reason was that the ISA was using “nominal figures, rather than real”.
He suggested this was “inconsistent with what the Australian Securities and Investments Commission (ASIC) has told super funds, or anyone who is making public statements about balances on withdrawal of super balances”.
“Generally the well-respected methodology to predict the time value of money is to take into account an inflation adjustment,” he said suggesting that using a “nominal figure gives a larger hit to retirement balances”.
Senator Paterson later used social media to distribute a video of Jeremenko’s testimony, something which was retweeted by Senator Bragg.