Super wipe out: More than 10,000 Tasmanian completely drain their super balance

Industry Super Australia

Super wipe out: more than 10,000 Tasmanians drain their retirement savings

Almost $600 million has been drained from super balances of Tasmanians and more than 10,000 of the state’s workers have emptied their savings, new analysis on the early release of super scheme reveals.

Industry Super Australia analysis shows about one in five Tassie workers have accessed the scheme withdrawing $587 million from super, at an average of $7,719 per application.

Tasmanians have made an estimated more than 78,800 early super redemption applications.

Those in the Dennison electorate withdrew the most – $133 million from more than 17,500 applications, and 3,300 people from the Hobart-based electorate have completely drained their retirement balance.

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 The government estimates $42 billion would be withdrawn from super, this is a dramatic increase on its initial $29 billion estimate.

But accessing super early comes at a steep price to their savings, a 30-year-old who withdraws $20,000 could have up to $80,000 less at retirement.

Only sticking to the legislated promise to lift the super rate will stop the almost 80,000 Tasmanians who have accessed their super retiring with less and being lumped onto the aged pension.

The super rate is legislated 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 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 2014 when the super rate was last frozen and economists conceding the prospect of any real wage growth in a post-COVID world is remote.

Not only would ditching the increase take away the only income increase Tasmanian workers are likely to get, it would have a dire impact on the savings of those 78,800 Tasmanians 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, while 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 Tasmanians dumped onto the meagre pension – a bill everyone will have to pay through higher taxes.

/Public Release. This material comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length.