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Early super slashes $4.7bn

By Maja Garaca Djurdjevic
3 minute read

Consumers who tapped into their superannuation early as part of the government’s COVID response stimulus package have already lost a total $4.71 billion of market gains, new research has revealed.

Australians who took part in the early access of super scheme have foregone any potential capitalisation on the amount they withdrew, which according to a recent report can be quantified in billions.

According to the McKell Institute, a critic of the government’s scheme, given the “massive” recovery seen by the super funds since their bottom in April 2020, an individual that withdrew approximately $7,500 has already foregone $2,420 in market gains.

Overall, the $36.4 billion withdrawn by 3 million Australians would have grown to $41.1 billion if left in Australia’s largest super funds.


“It’s well known that superannuation invested early will multiply by retirement age. Therefore, $2,000 in lost interest today could well become $5,000 by retirement age,” the McKell Institute said.

“This is particularly pronounced as young workers were the most likely to embrace the early access scheme,” the institute noted.

Recent data from the Australian Bureau of Statistics showed that 29 per cent of Aussies that accessed the scheme used the extra funds to service their mortgages or rent payments. Household bills swallowed up 27 per cent of all super early releases, while credit card debt took up 15 per cent.

Calling these findings problematic, the McKell Institute said “Australians shouldn’t have to withdraw from their super to meet these financial obligations”.

“If Australians were struggling with mortgages, bills or credit cards, then there should have been economic stimulus and a secure social safety net to provide for them.”

According to McKell’s projections, compared with 1 January 2020, most leading super funds have now recovered up to 20 per cent higher than that position, recovering from a temporary decline of 10 to 15 per cent during the COVID-19 pandemic. 

As such, the institute believes that almost any option for providing welfare to Australians would have been better than this.

“The first thing that the government should have done is offer more targeted government assistance programs to those in need, rather than giving them the option of paying off their super,” the institute said.

Alternatively, it suggested the government could have enforced with banks, landlords, lenders, financial services and utility companies to offer deferred payment schemes to all customers.