- New data released from illion and AlphaBeta indicates many people who did not see a decline in their income amid the coronavirus pandemic accessed their superannuation anyway.
- According to the figures, 40% of those who took advantage of the program either did not lose income, or had any loss compensated by schemes like JobSeeker and JobKeeper.
- The data also points to an increase in discretionary spending following payments.
New data released today from illion and strategy consulting firm AlphaBeta suggests nearly half of those who took part in the government’s early superannuation access scheme had not seen an actual decline in their income.
According to the data, which is based on analysis of bank transactions, 40% of those who took advantage of the scheme had not taken a hit to their income, either because they were not affected by the COVID-19 downturn or because any loss was offset by government support programs like JobSeeker and JobKeeper.
Since announcing the scheme, the government has maintained that individuals must meet at least one of three criteria in order to be eligible for the program. They must either be unemployed, eligible to receive a job seeker payment, or saw at least a 20% fall in their hours worked or turnover.
The new data suggests that many who did not meet any of that criteria were nonetheless able to access their super.
The report suggests that spending increased in the weeks following the widespread disbursement of superannuation funds. Spending nearly tripled in the fortnight after the money was received, compared to a usual fortnight. On average, according to the data, recipients spent $2,855 more in that two-week period.
The kicker, underpinning illion and AlphaBeta’s report, is that 64% of the additional spend was discretionary, including on purchases such as “clothing, furniture, restaurants and alcohol.”
“There’s a group of people out there living very large on pizza and beer courtesy of tax-free super,” said Simon Bligh, CEO of illion, in a statement. “These are the most expensive pizzas they will ever eat.”
It’s a crude way of illustrating it (not the least because pizza and beer are by no means invalid things to spend money on) but the data does expose some significant flaws in the administration of the super withdrawal scheme.
Consumers can hardly be blamed for taking an opportunity to secure themselves some liquidity, especially in uncertain times. This is doubly the case for young Australians, who may not have much super to begin with – and won’t otherwise see a cent of it for half a century.
The problem is in the administration – and indeed the entire thinking behind the scheme. As AlphaBeta founder Andrew Charlton articulated in the Sydney Morning Herald on Monday morning, the super withdrawal program’s lack of safeguards and careful administration were even more compromising in the face of the government’s other moves to expand social welfare.
“The government has done a good job in this crisis expanding the social security system through the targeted stimulus payments, JobKeeper and JobSeeker programs,” Charlton writes. “Banks and other businesses have helped by deferring loan payments, reducing rents and offering relief for household bills. Why did the government encourage Australians to plunder their superannuation, once it had established such a comprehensive set of hardship measures to help them?”
The latest figures from APRA indicate 1.78 million Australians have applied to access their superannuation, with 1.63 million being paid. $12.2 billion has been paid since the inception of the scheme, totalling an average of $7,476. That average suggests many applied to withdraw the full $10,000 – the maximum amount that can be taken out this financial year.
Concerns around Aussies unnecessarily raiding their retirement savings aside, other problems have emerged around the super withdrawal scheme.
Early in May, the government announced it would pause the withdrawal scheme amid a fraud investigation by the AFP.
An investigation by Business Insider Australia found at least one couple almost fell victim to the fraud despite the fact they technically should not have been eligible to withdraw super at all.