The government should reuse the early release of superannuation (ERS) to provide relief in a future economic crisis, but should do so only with more guidelines around the withdrawal of funds, a government senator has suggested.
Speaking as part of a recent Financial Services Council webinar, New South Wales Liberal Senator Andrew Bragg said it was important to remember ERS provides security for superannuation fund members who may need access to money in the present.
When questioned during a discussion with RiceWarner executive director Michael Rice as to whether ERS should be kept on the table for future use, Bragg said: “I think it should because it is providing access to people, during an economic shock, to their own money.”
He also rejected suggestions ERS will leave people lacking in post-retirement income as the system was still heavily propped up by the government.
“Given we underwrite almost every Australian with a pension, it is just not true that taking super today is ruining the future,” he said.
“All the Treasury modelling shows most people will be on a pension and if people need money now to pay down debt, or pay school fees or pay for essentials, that is an appropriate use of that money.”
He agreed with a comment from Rice that the superannuation sector would be more comfortable with future versions of ERS if it had formalised processes that could be managed compared to the very short notice it was given as a result of COVID-19.
However, he added the super sector had to consider the pool of savings could be drawn upon to prevent deeper economic problems.
“I know it is uncomfortable for the superannuation industry, but the national government has opened the cheque book through wage subsidy and increased unemployment benefits. We will do all we can to support people’s lives, but there is a $3 trillion pool of savings that can also be deployed to help,” he said.
“At the end of the day, the most important thing a government can do in a crisis is keep the fabric of society together and that is what we are trying to do, but the idea that taxpayers have an endless pool of money and that super can never be touched is unrealistic and out of touch.”
