More than half a million Australians have all but emptied their superannuation accounts as the thousands access the government's COVID-19 early release scheme.
Now extended until December 31 this year, the scheme allowed for eligible Australians to take out $10,000 from their super in the 2019-2020 financial year and an additional $10,000 in the 2020-2021 financial year.
Treasury now estimates Australians will withdraw a total of $42 billion from superannuation accounts as part of the scheme.
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Initial estimates forecast that as many as 560,000 Australians have emptied their superannuation accounts, 460,000 of whom are aged under 35.
The most recent data from the Australian Prudential Regulation Authority (APRA) shows that $28 billion has already been paid out.
Of that, eligible applicants received an average payment of $7719, 96 per cent of whom were paid within four days of applying.
CEO of the Australian Institute of Superannuation Trustees (AIST) Eva Scheerlinck said low income earners will be hurt most by using the scheme.
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"We understand that a great many Australians have had no choice but to rely on their super to get them through the COVID crisis, but the harsh reality is that low income earners and women, who were already facing a retirement savings shortfall, would be hit hard by this scheme," Ms Scheerlinck said.
"We know that many young women now have a zero balance in their super fund which will only exacerbate the gender super savings gap that sees many more women retire in poverty."
The AIST estimates that a 25-year-old who accesses $20,000 in super now could cost themselves $60,000 by the time they retire.
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"The COVID early release scheme is an income-support system that is very expensive for individuals and cheap for the Government, when it really should be the other way around," Ms Scheerlinck said.
"With global interest rates close to zero, the Government is well positioned to borrow money that could be used to assist Australians who are struggling. "Meanwhile ordinary workers are being forced to withdraw super savings that could be delivering them at least 5-7 per cent in annual interest over the long term."
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