The Conexus Institute, Super Consumers Australia and The Actuaries Institute have released calculations that estimate that those members who withdraw large chunks of their superannuation under the government’s early release provision could reduce their balance at retirement by as much as $50,000.

According to the information sheet provided by the working group, a 30-year old member withdrawing up to $20,000 over two years could potentially reduce their superannuation balance at retirement (at age 67) by $50,000. For a 40-year old, they could take a $39,000 hit, for a 50-year old it would cost them $30,000, while a 60-year old will have a reduced balance of $24,000.

The information sheet was released on the same day that the Australian Securities and Investments Commission published a FAQ page addressing guidelines around projecting the retirement impact of early access to super. ASIC highlighted that communications from super fund trustees should be “clear, accurate, balanced and must not mislead or deceive”.

The calculations also estimate that the impact a $20,000 withdrawal would have on a retirees’ regular income ranged from $108 per fortnight for a current 30-year old to $52 per fortnight for a 60-year old.

“Withdrawing from your super now can only reduce savings at retirement which means less income,” the sheet notes. “The size of the impact is uncertain because it will depend on unknown factors such as the future rate of investment earnings on your super.”

It also warned that those consumers with low balances should be wary of losing their insurance entitlements when tapping their super early.

The information may also be used as a resource for both non-super fund licensed financial advisers and Financial Counsellors Australia, the two groups most likely to advise clients on early super access outside of the super funds themselves.

Correction: An earlier version of this story incorrectly linked the information sheet to the Australian Securities and Investment Commission. ASIC did not play a role in the production of the document.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
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