ASFA: Superannuation comes to the rescue (a little bit) during COVID-19

A new report by the Association of Superannuation Funds of Australia (ASFA) has been published, examining our experience of the pandemic via our superannuation savings.

Around 2.5 million Australians have accessed early release of super at the end of the financial year, with many more expected to request new or additional release after 1 July. The uptake has been very high for eligible people - the same amount of people have lost employment or have reduced hours of work since April 2020.

The maximum allowed at this stage is $20,000 across two payments of $10,000. JobKeeper maxes out at $19,500, with the early release of superannuation available much sooner than the JobKeeper payments.

The Government expects over 15 per cent of the labour force, and over 10 per cent of the number of people with a super balance, to receive some of their superannuation balance. Around 25 per cent of applicants had a balance of under $6,000 and 40 per cent had under $10,000 once their early access had been granted. Five to ten per cent had zero or not much left.

Men, those aged 35 or under, Queenslanders, Western Australians and Territorians all applied more than other states for early release of superannuation. Anyone working in the hospitality or retail industry was more likely to apply, reflecting age groups on average.

Queensland’s tourism industry has been dealt a heavy blow, while the Australian Capital Territory (ACT) has more public sector employees so saw fewer applications.

Funds have responded to the requests for funds by boosting cash holdings and running down holdings of fixed interest assets. Industry super funds have been the hardest hit (65 per cent of all early release requests), followed by retail funds (29 per cent paid), public sector (five per cent) and corporate funds (one per cent). There is no data for self-managed superannuation funds, but the figure is unlikely to astound.

Australians do not have great cash reserves to draw on in an emergency excluding superannuation. There are fewer than five per cent of wage and salary earners that receive rent on an investment property, and less than 10 per cent have dividends from shares over $200 per year.

A quarter of households have under $1,000 in cash savings. In people under 35, superannuation may be the largest and only financial asset. Women who earn wages or salaries aged under 35 have limited shares (five per cent), with just two per cent receiving annual dividends over $200. Just 1.3 per cent received rental income.

In men, the figures are similar. Only six per cent hold shares and only 1.3 per cent received rental income over $200.

Those earning lower incomes and younger people don’t have financial resources that can help them when needed, making compulsory superannuation very important in our current situation to tide people over.

Read Experience to date with the early release of superannuation in full (PDF)