**CORRECTION: Please note an incorrect statistic was mistakenly included in the earlier release. This has been rectified in this updated version.**
HESTA says early release data shows that without urgent changes to the superannuation system a cohort of young women will face a widening gender super gap and greater long-term financial vulnerability.
HESTA CEO Debby Blakey says the Federal Government’s Retirement Income Review Panel should urgently consider the impact of the early release superannuation scheme on women’s retirement outcomes.
HESTA data on members accessing their super under the COVID-19 Early Release of Super scheme reveals a high proportion of younger women have effectively drained their super, decreasing their balances by between 60-78%.
“We understand how challenging the economic impact of COVID-19 has been for many people. The strength of our super system has meant that we’ve been able to provide this vital support to our members in need and have paid out more than $720 million to approximately 91,000 HESTA members,” Ms Blakey said.
“The early release super scheme has provided vital short-term assistance for our members but if urgent action is not taken these young women risk facing a greater vulnerability to poverty as they age.
“We already know that women over the age of 55 are the faster growing group of people experiencing homelessness and unless we reform our super system to make it fairer for women and the lower paid we are consigning the next generation of Australian women to the same grim reality.”
Ms Blakey said the Fund was seeing around 62% of female HESTA members who claimed their super under the early access scheme apply for the full $10,000.
Just over half of members who accessed their super early under the scheme were aged between 24 and 39.
“Most concerning is that these members were also more likely to be lower paid,” Ms Blakey said.
“They typically earned between 9% to up to 14% less than the typical member in their age group, making it that much harder to rebuild their super over the long-term.”
The impact on the account balances of the youngest cohort of members who accessed their super was also significant.
Members aged between 18-24 have virtually drained their super accounts, leaving this group with a median account balance of just $1049, a median decrease of around 78%. Members aged 25-39 also saw big falls in their super balances.
A member in this age group was left with a median balance of $3609, a decrease of 68%.
According to APRA’s latest figures, HESTA was sixth in terms of funds who have received the largest numbers of early release applications, with the Fund’s applications making up just under 5% of all applications received.
In its submission to the Federal Government’s Retirement Income Review, HESTA has called for a range of measures to create a fairer super system for women and lower paid workers.
HESTA’s recommendations to the review panel include:
1. Unpaid caring roles be valued in an appropriate way that recognises the economic contribution made by this work;
2. Superannuation be paid on Commonwealth Paid Parental Leave;
3. The $450 threshold for Superannuation Guarantee payments be removed;
4. Superannuation entitlements are provided for workers who are not classified as employees and/or perform non-standard work;
5. The Superannuation Guarantee rate move to 12% as soon as possible;
6. The taper rate for the age pension be reviewed;
7. The process for superannuation splitting in the event of relationship breakdown be improved; and
8. The value of insurance in super for low income earners be recognised
“We’ve been strong advocates for reform of the super system to make it fairer for women and the lower paid,” Ms Blakey said.
“Women are already well behind men when it comes to saving for retirement. We don’t want to see younger women paying an even great price later in life because of a superannuation system that has a gender blind spot.”