Despite concerns that the superannuation industry would need assistance with dispensing cash for the early release scheme, Treasury has indicated as far as it’s aware, the funds are holding up.
Jennifer Wilkinson, deputy secretary to the fiscal group under Treasury, made the comments during a public hearing with the Senate select committee on COVID-19.
Ms Wilkinson confirmed as at Thursday 1.65 million people had applied to access their superannuation, with 1.62 million being approved and the total amount set for release sitting at $13.2 billion.
In early April, shadow treasurer Jim Chalmers and shadow assistant treasurer and financial services minister Stephen Jones wrote to Treasurer Josh Frydenberg suggesting the Reserve Bank make a loan to super funds, to help with liquidity issues as they commenced the early release scheme.
But Ms Wilkinson reported that since the scheme has commenced, Treasury had not seen evidence of any issues around the funds’ liquidity.
“We’ve continued to engage with APRA quite closely through this process and ARPA [has] been monitoring liquidity issues,” she said.
“They have not provided us with any indication that they’ve got any concerns about there being liquidity issues in any funds, but they’re continuing to monitor it closely.”
She added she was not aware of any funds that had alerted Treasury of problems with liquidity in relation to the early withdrawals, but she took the question on notice.
The department has not completed any modelling around the impact on age pension payments in the future, resulting from depleted superannuation accounts from the early release.
Ms Wilkinson noted any of the impacts would be “well beyond the forward estimates and almost certainly well beyond the medium-term”.
“When you’re thinking about that, you then also have to think more broadly about what people would do with this money if this money is used to invest in other assets,” she said.
“There are lots of things you have to think about in trying to work out what the impact would be.”
Senator Murray Watt interjected: “But you would assume that people who in a position where they are having to make early superannuation withdrawals to stay afloat aren’t investing that in income-producing investments.”
Ms Wilkinson responded: “They may not be, but these may be people who are going to rely on the full age pension when they retired anyway. There are lots of things you have to think about if you are trying to work out what that impact would be.”
Treasury secretary Steven Kennedy also told the committee the 6.2 per cent unemployment figure recorded by the ABS in April was in reality closer to 10 per cent.
The number of people who left the workforce was larger than anticipated by the government department, which was put down to individuals needing to be classified as “available for work” to qualify as unemployed.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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