More than $1.6 billion has been drained from the retirement savings of South Australians
Almost 30,000 South Australians have wiped out their super savings as the state’s workers have withdrawn $1.6 billion from their retirement nest eggs, sparking fears that if the legislated super rate increase is dumped more workers will retire with less and be more reliant on the aged pension.
New Industry Super Australia analysis estimates South Australians have made more than 210,000 applications via the early release of super scheme, withdrawing on average $7,921 per application.
The top three federal electorates by withdrawals were Adelaide $177 million, Hindmarsh $161 million and Port Adelaide $159 million. More than 10,000 people from those three electorates have completely drained their super savings.
In April the government broke open super’s preservation rules allowing Australians who had lost their jobs or had hours reduced to access $10,000 in super before July 1 and a further $10,000 until December. The government now estimates $42 billion would be withdrawn from super, a dramatic increase on its initial $29 billion forecast.
But accessing super early comes at a steep price to the final nest egg, a 30-year-old who withdraws $20,000 could have up to $80,000 less at retirement. The legislated promise to lift the super rate is the only realistic way South Australians can make back some of what they have lost.
The super rate is scheduled to rise from 9.5% to 12% by 2025 – with the first small 0.5% increase to occur in the middle of next year. But a noisy mob of Coalition backbench MPs, who pocket more than 15% super on top of their generous parliamentary wages, want to dump the increase.
They use the specious argument that more super comes at the expense of higher wages, despite wage growth flatlining since the super rate was last frozen in 2014 and economists now conceding that post the COVID-19 downturn the prospect of any real future wage growth is remote.
Not only would ditching the increase take away the only income increase SA workers are likely to get, it would have a dire impact on the savings of those who accessed their super early.
ISA analysis shows that if the super rate increase were cut, an average 30-year-old man who took $20,000 from their super would either lose $180,000 from their retirement or be forced to work until 74, an average 30‑year-old female would need to work an extra eight years or have $150,000 less at retirement.
The super rate must rise to 12 per cent as legislated or there could be a generation of South Australians who either retire with far less and most get by on the meagre pension or be forced to work until they drop.