Assistant Minister for Superannuation Jane Hume said the federal government’s decision to allow the early release of superannuation will not cause liquidity problems for the nation’s superannuation funds, despite reports to the contrary.
Speaking at the Investment Magazine & Professional Planner’s digitally live-streamed Retirement Conference, Hume vehemently denied that asset owners have approached the Reserve Bank of Australia seeking liquidity in order to meet withdrawals, without being forced to sell down assets into turbulent markets.
The Assistant Minister conceded that there were pockets of concern about super being viewed as the ‘go-to’ bailout in a crisis, but argued that these concerns were coming from the media rather than the industry which she said had stepped up to support members.
Press reports have emerged that the super industry was looking for a “liquidity backstop facility” from the central bank as fears mounted that member withdrawals will be much higher than the $27 billion that has been estimated. Cbus Super’s investment chief Kristian Fok said he too expects the amount of money withdrawn to be greater than the 1 per cent of total assets forecast by the government.
Hume said that none of the superannuation funds had informed her office of any such plan to reach out to the RBA.
“We are not concerned about liquidity as the vast majority of funds are in a comfortable, and appropriately, liquid position to meet their obligations,” she said. “So the federal government is not of a mind to support meeting those liquidity requirements.”
The Assistant Minister also refused to rule out the possibility that the government might allow financially-stressed people to tap even more money after its recent decision to allow people to access up to $20,000 over two years in the wake of the Coronavirus pandemic. She did, however, say that freezing the superannuation guarantee at a 9.5 per cent was not on the agenda for now.
“In these uncertain times it would be foolish to say never – who would have thought we would be here,” she added.
Hume said Canberra’s decision to permit the early release of super was “not taken lightly” and had been accepted with “considerable enthusiasm” by the superannuation funds and the public.
She added that the prudential regulator had the power and the tools it needed to assist those funds that might have a more “recalcitrant” attitude when it comes to doing the “right thing” for members.
Hume also told the conference that super funds were more worried about the administration of the grant rather than liquidity. She said their worries were assuaged by the Australian Tax Office which agreed to carry out the bulk of the administrative work using “existing rails”.
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