COVID early super release hits taxpayers with higher pension costs
New modelling completed by the Super Members Council (SMC) found the Early Release of Super Scheme used during the COVID-19 pandemic could leave taxpayers paying $85 billion over the next 76 years due to higher pension costs.
The scheme, which saw three million Australians lower their superannuation balances by $38 billion, will set back Australians aged in their 20s around $3,000 more in tax over their lifetimes. This comes after approximately 725,000 Australians reduced their retirement savings to zero, of which 45 per cent were aged 25 and under and 70 per cent were aged 30 and under.
The data also showed the scheme’s costs in higher pensions and lower super tax receipts are projected to hit $2.5 billion a year by the mid-2060s.
“In the early stages of the COVID pandemic, before Government assistance kicked in with JobKeeper, many Australians were encouraged to sacrifice their retirement savings to support themselves. Tragically, that will now leave many people significantly poorer in retirement,” Super Members Council chief executive, Misha Schubert, said.
“Those withdrawals will also cost the next generation of taxpayers in a case of fiscal long-COVID.
“These are the devastating consequences of schemes that break super’s preservation rules. People are left with far less money at retirement, and the next generation – our children and grandchildren – will have to pay higher taxes to pick up the bill for higher pension costs.”
The modelling from the SMC was also presented in the association’s submission to the Australian Government’s consultation on the Objective of Super Legislation, which was before Parliament at the end of last week.
Schubert said the legislation “enshrine the purpose of super in law” would help to ensure adequate savings are put aside for use in retirement.
“Ask Australians what super is for, and they’ll tell you it’s their money for retirement. The ‘objective of super’ legislation will reflect that clear and compelling purpose in ironclad law. It will be a guiding light for all future super policy development,” Schubert said.
“We strongly support the legislation. It will ensure super stays strong and secure – and continues to deliver a financially secure retirement for millions of everyday Australians.”
Typical Industry Super BS research.
Did they look at any of the benefits to the economy, No.
Did they look at any of the benefits to the household budgets, No.
Did they look at any of the benefits of people paying off Home Loans, No.
INDUSTRY SUPER ARE FULL OF SELF SERVING PROPAGANDA BS.
Less than 1 year of the NDIS nearly… What a bunch of crap. 76 years.
Also, I read somewhere that clients switched $34bn of super into cash options during the middle of COVID doing way more damage long term. (Happy to be told otherwise that it wasn’t $34bn.).
Where’s the discussion about that?
Easy solution to the ‘problem” is to increase SGC to 20% (and direct all these contributions to the local Industry fund…(I wouldnt want to bet against this)!
Was this so-called research sent for audit? What are the underlying assumptions? Was there a Disclosure of lack of independence on the part of the researchers? Who paid for the research? Probably all members of Industry super funds. Were they told what their money is doing? And why were the researchers allowed to do projections for more than five years? Was there Disclosure about how uncertainty increases logarythmically the further into the future the projections go?
All sorts of problems with this kind of self-serving so-called research.