Assistant Minister for Superannuation Jane Hume has revealed that at least 743,000 Australians had registered to tap up to $10,000 of their retirement savings early. That’s up from around 600,000 in less than a week.
Hume told local radio station 2GB on Wednesday that she expects superannuation funds to transfer the money into the bank accounts of members within a week of receiving the direction from the Australian Tax Office. She said the ATO will send the “first batch” to funds from the 20th of April.
“This is all about making sure that Australians have the flexibility to respond to their personal needs,” she said. “Some people won’t apply for the whole amount, some won’t apply at all and some people will apply for the full amount, but we just want to make sure that Australian families have the opportunities to access their own money should they need to.”
The government blindsided the superannuation industry last month after announcing the change to the financial hardship provision that now allows financially-strapped Australians from the outbreak of the coronavirus to tap up to $20,000 of their super early over two years. While the Treasury estimated around 1.6 million people will make a claim totalling $27 billion, estimates among industry funds have forecast that figure to be closer to $65 billion.
Treasurer Josh Frydenberg said at the start of the week that the ATO had seen more than 600,000 registrants for the early release provision. This follows a wave of unemployment that this department estimates will send Australia’s jobless rate to 10 per cent, the highest in almost three decades.
The Australian Prudential Regulatory Authority has also released guidance that requires super funds to process hardship claims within five working days.
Funds with members employed in the hardest hit retail and hospitality sectors from government restrictions to social distancing are expected to be hardest hit from the early release provision, along with those that have low average account balances. Funds across the industry have responded to the policy announcement by selling equities and fixed income to bolster their cash reserves.
The chief executive of MLC, Geoff Lloyd, said last month that the retail super fund expects hardship claims to surge to 25,000 a month, up from around 1,000 a month under existing provisions.