Around 1.6 million Aussies are expected to withdraw part of their super from Monday, as the government begins accepting applications

There is expected to be more than a few Australians vying to withdraw their superannuation as early access becomes possible. (Photo by Roman Camacho, SOPA Images)
  • Australians affected by the economic downturn will be able to apply to access their superannuation from Monday.
  • 1.6 million are expected to do so, with the government promising to streamline the application process to five days.
  • However, critics of the policy say more could be done to help these people who have “slipped between the cracks” of other support packages.
  • Visit Business Insider Australia’s homepage for more stories.

With applications opening on Monday, Treasury expects more than a million Australians to try and withdraw part of their superannuation.

Under the new policy, the federal government will allow those affected economically or physically by the COVID-19 outbreak to access up to $20,000 of their retirement savings in two separate allotments over the next two years.

In total, the government expects the unprecedented access scheme to drain $27 billion from the $3 trillion superannuation industry.

Promising to streamline the process to take less than a week, much of that amount could be taken out of stock market and other investments as soon as Friday.

Eligible Australians who since 1 January have been made redundant, had income or revenue reduced by a fifth, are unemployed, or receiving certain government payments will all be able to access their fund. Amongst those million and half people will be some of the country’s most vulnerable.

“These are casual workers, most likely lower paid and with less job security, who on top of all that have lost income or just been laid off,” Future Super managing director Kirstin Hunter told Business Insider Australia. “They’re now not only not contributing to their super but also drawing what money they have built up. With all these factors compounding there’s going to be a really significant impact for those people who withdraw once they do hit retirement age.”

While super funds and economists alike have warned of the risks associated with drawing down retirement savings, these people are ultimately the victims, not the villains, in all of this, according to Hunter.

“They’ve lost their jobs and income and they’ve fallen between the cracks of other support policies. But no one should have to make a choice between putting food on the table today and having a livable future tomorrow,” she said.

While crediting the government with implementing expansive support policies such as the JobKeeper package, Hunter notes more could be done for these 1.6 million Australians who will struggle to make ends meet otherwise.

If members of the sustainable fund do decide to withdraw, they may, however, be in a better position than most. Hunter notes that while the ASX may have fallen 25.9% between late February and 12 March, Future Super’s sustainable funds dropped less than 11%.

“It goes to show ethical investments can outperform the ASX as a whole and withstand the volatility we’re seeing at the moment.”