The Association of Superannuation Funds of Australia (ASFA) has analysed the impact of the COVID-19 financial hardship relief measure that allowed individuals to legally access their retirement savings early and has found it to be an overall success.
“The COVID-19 early release of superannuation scheme was a success in terms of making a large number of payments in a very short period of time to those Australians in need,” ASFA deputy chief executive Glen McCrea said.
The industry body’s assessment also found superannuation funds performed well in processing member requests stemming from the coronavirus initiative.
To this end, ASFA determined super funds made $38 billion in payments during a period where financial markets were distressed and processed 4.9 million applications for payments in a very short timeframe despite having lockdown orders apply.
Further, incidences of fraud were kept to a minimum and no members lost their money as a result of fraudulent practices.
The study also identified the individuals who would most likely be disadvantaged by the measure over the long term.
“Young people, women, single parents and the unemployed paid a high price in terms of the cost to their retirement savings,” McCrea noted.
When examining the negative effects of the move, ASFA revealed around 1 million Australians using the relief either cleaned out or closed their retirement savings account, with this activity being more common among the unemployed, single parents and women.
“While superannuation was able to do much of the heavy lifting by distributing payments to people quickly in the early days of the COVID-19 pandemic, it’s important that we recognise the detrimental impact that this has had for the retirement savings of millions of Australians,” McCrea said.
He also used the findings as a call to address another critical element of the retirement savings system.
“It’s more important than ever that we legislate the objective of super to ensure that Australians’ savings are preserved to support a dignified lifestyle in retirement,” he said.
