- Official figures show 665,310 Australians applied to access their superannuation early in just the first week of the program.
- While only a quarter had been processed by 26 April, the demand would see $5.3 billion withdrawn in retirement savings.
- The figures put the current rate of withdrawals at twice the pace of deposits into the $3 trillion super industry.
- Visit Business Insider Australia’s homepage for more stories.
Australia’s $3 trillion superannuation industry is experiencing a game of smash-and-grab, as nest eggs get cracked open under the federal government’s early access scheme.
In week one of the program, $1.3 billion was emptied out of funds for some 162,879 applicants, according to APRA figures released this week.
That’s just a taste, with three times that number of applications left unprocessed at the end of the first week. All up it would set up week one to drain a little over $5.3 billion in total, with an average payout of $8,002 – a decent chunk of change, but less than the upper limit of $10,000.
“A substantial number of applicants have less than $10,000 in their superannuation account or are withdrawing from more than one superannuation account,” Association of Superannuation Funds of Australia CEO Martin Fahy said in a statement.
“Some applicants also are withdrawing only what they need rather than the maximum amount.”
With more than a week having passed since those APRA figures were taken, as much as $10 billion may already be in the process of being withdrawn. The government expects $27 billion to be taken out in total, despite Australians being warned on its dangers.For comparison, around $30 billion in contributions were made nationwide in the three months to December. In other words, superannuation is currently being withdrawn at twice the clip it gets deposited.
Interestingly, of the 167 funds contacted by APRA, just 80 reported receiving requests for early access, “with more expected to follow in the weeks to come”. It shows the process appears to be fairly smooth for a government operation, with applications taking 1.6 days to be processed by funds, after being greenlit by the Australian Tax Office (ATO) first.
“We expect trustees should generally be able to achieve this within five business days, however we recognise this may not be practicable in all cases, as trustees conduct fraud checks, and fulfil their legal obligation to look out for the best interests of all fund members,” APRA deputy chair Helen Rowell said in a statement.
“APRA is closely monitoring trustee performance in this area and will consider taking appropriate action if evidence emerges of funds not releasing benefits to eligible members as soon as practicable.”
The demand has seen some of the country’s larger funds bolster their processing teams, with UniSuper telling Business Insider Australia “we have extended our operational workforce to meet the expected demand”.
A separate ASFA analysis suggests a 98% approval rate on all applications received, with a small number being rejected for suspected fraud.
Otherwise, the scheme appears to be going reasonably smoothly, despite some shortcomings the industry itself has with the scheme, even with Fahy lamenting the fact funds were only given “18 working days to prepare for one of the biggest system changes in 30 years”.
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