The legacy of the COVID early release super scheme on the retirement outcomes for millions of Australians will last a lifetime without policy measures to help bridge the savings gap, Australian Institute of Superannuation Trustees (AIST) CEO Eva Scheerlinck warned today.
In her opening address at AIST’s flagship superannuation conference in Adelaide, Ms Scheerlinck said the industry and the government needed to turn its attention to helping rebuild the super balances of more than 3 million Australians who were made to choose between poverty now and poverty later.
A recent AIST-Essential poll (in March 2021) found nearly seven in 10 Australians who dipped into their superannuation during COVID-19 were concerned the decision has made them less financially secure.
The COVID Early Release Scheme – which closed at the end of 2020 and allowed those experiencing financial hardship withdrawals of up to $20,000 of their super over two tranches – saw a total of 3.4 million Australians withdraw more than $36 billion in early release super.
Most worryingly, the poll results pointed to women being far less able, or likely, to make extra super payments to make up what they took out through the COVID scheme. More than half of men who made an early withdrawal are now making extra payments into their super (59%), compared to just one in five women (21%).
Ms Scheerlinck told the conference that raising the compulsory super rate to 12% by 2025 as is currently legislated was a vital to boost super balances, particularly for women who had taken early release during COVID.
“Those who can least afford to lose their super now find themselves in the position of having to close the gap or end up retiring with the same meagre amount of super as their grandmothers did. We simply must not condemn another generation of women to poverty in retirement,” Ms Scheerlinck said.
“While a pathway to 12% super doesn’t close the gender savings retirement gap, it does improve the adequacy of super savings for all, including women.
“The abolition of the $450 monthly income threshold, as announced in the budget last week, is an important win and gets us closer to universal superannuation for all. But there is so much more to do. It was disappointing that the Government did not announce super on paid parental leave, as this measure is another important equity step.”
The poll found that most people who withdrew from their super say it’s important that the scheduled increase to super goes ahead – 47% of those who withdrew superannuation said it’s always been important to them that, and an additional 32% said since making a withdrawal from their super, it’s now more important.