- A new survey from the Australian Bureau of Statistics reports that most Australians who withdrew super early spent the money on mortgages, rent, bills and debt.
- The government says that the program was an “overwhelming success” at helping Australians deal with financial hardship through the pandemic.
- Regardless, the early access super scheme faced numerous speed bumps, including allegations of fraud.
- Visit Business Insider Australia’s homepage for more stories.
Most Australians who dipped into their retirement savings with the superannuation early access scheme used the money to pay off mortgages, rent, bills and debt, according to a new survey from the Australian Bureau of Statistics (ABS).
The Survey of Income and Housing, which covers the September quarter in 2020, found that by the end of that period 29% of those who accessed their super under hardship provisions used the funds to pay for their mortgage or rent, while 27% said they used it to pay for bills.
Furthermore, 15% of people said they used it to pay for credit card or other personal debt, while 13% added the windfall to their savings. Only 6% used it to purchase or pay off a vehicle. 12% used the money for something else, defined as “purchased food or non-alcoholic beverages, medical services or supplies or other household services / supplies, and assisted family members”.
Most people who accessed their superannuation early due to financial hardship caused by COVID-19 mainly used it to pay their mortgage, rent or other household bills. For more, see https://t.co/OcRMR6QKeU pic.twitter.com/8JkejZV16z
— Australian Bureau of Statistics (@ABSStats) April 22, 2021
The data suggests that despite fears Australians were dipping into their nest egg for discretionary spending splurges, the majority report using it for what it was intended: staving off financial hardship during the pandemic.
“The early release of super scheme was an overwhelming success and proved a lifeline in a period of financial uncertainty,” Minister for Superannuation Jane Hume told AAP regarding the survey results.
“The Morrison government acted decisively in the national interest to support households and businesses and address the significant economic consequences of the COVID-19.”
A somewhat troubled scheme – depending on who you ask
Despite that, the scheme did run into speed bumps along the way, as one might expect of a program hastily assembled in the face of a looming threat.
Announced in March 2020, the superannuation early access scheme allowed Australians experiencing financial hardship amid the COVID-19 pandemic to access up to $20,000 of their retirement savings over two financial years.
The government were forced to slam the brakes on the program briefly early in its life after reports emerged fraudsters were impersonating Australians to access their retirement savings.
Despite the fact stringent rules were in place regulating who could access their retirement savings, the Australian Tax Office admitted it waved through applications without verification with the intention of auditing them later.
Fines of up to $12,000 were threatened for those who withdrew without facing hardship, though the ATO conceded in November that none had actually been issued, despite an estimated 316,000 technically illegitimate withdrawals.
Speaking to Business Insider Australia last June, a number of Australians admitted being worried the ATO would pursue them over their withdrawals – some of which were clearly in contravention of the official rules, while others were marginal cases in the grey areas of the guidelines.
Regulator ASIC wrote a scathing letter last April targeting real estate agents who were reportedly instructing tenants to withdraw super to service their rent, while some mortgage brokers told Business Insider Australia they had observed a number of people trying to use their retirement haul to get their foot on the property ladder, to varying degrees of success.
The whole time, the super industry and the fund managers who populate it were expressing their displeasure about the scheme, with one saying that it would “widen the gap between the haves and have-nots” and make retirement worse for hundreds of thousands of Australians.
Though the government and the industry may well argue about the long-term implications, this latest data from the ABS suggests that many who withdrew the money needed it.