It's a super problem

AUSTRALIANS who dipped into their superannuation during the height of the pandemic are up to $3644 worse off today, new research has revealed.

More than three million Aussies withdrew a total $36.4bn from their super accounts last year as part of the early super access scheme, intended to help those financially struggling during COVID-19.

But if that money had instead remained untouched in

Australia’s largest superannuation funds, the figure would have ballooned to $41.1bn by now.

It means Aussies have already lost $4.7bn in returns one year since the scheme, according to new analysis by the McKell Institute.

After hitting a low in April, 2020, Australian super fund indexes jumped 15-20 per cent in value as the economy bounced back.

Anyone who withdrew the maximum $20,000 allowable under the early access scheme would have already foregone up to $3644 of investment growth, according to the institute’s report, Buy high, sell low? The early super access scheme and foregone returns on investment.

McKell Institute executive director Michael Buckland said using the early super access scheme to get quick money when the pandemic hit was “worse than using a payday lender”.

“$4.7bn that could have been invested in the retirement savings of thousands of Australians has gone missing,” Mr Buckland said.

“If you took out the maximum $20,000 you were allowed to, then that’s cost you $3600 so far. Of course that loss only compounds over time.

“Of all the many ways the government could have helped people get through 2020, this had to be among the most costly.

“Instead of using its own borrowing capacity to help people, the government forced desperate citizens to miss out on an investment windfall they would otherwise be enjoying now.”

The federal early access scheme aimed to support people adversely financially affected by COVID-19 to help to meet expenses.

Those who took advantage of it weren’t required to reveal how they spent the money, but were advised to carefully consider the impact of accessing super early.

The McKell Institute warned against the policy to expand early access to people who were unemployed, receiving certain government payments or whose hours or trade had declined by a fifth.