Early superannuation withdrawals have jumped markedly in the new financial year as members access the scheme for a second time.
APRA figures show that of the 511,000 applications for withdrawals in the week to July 5, 346,000 were from members seeking to withdraw for a second time.
And they took more money on average than first-time users withdrew in the first half of the program, which ended on June 30.
The early super access scheme allows members suffering financial hardship to withdraw up to $20,000 from their superannuation, across two payments of up to $10,000.
Members had from the end of April until June 30 to withdraw their first $10,000, and now have until September 24 to withdraw the second $10,000.
The average size of second-time withdrawals significantly eclipsed the numbers in the first half.
In the week to July 5, second-time withdrawers requested an average of $8904, compared to an average of $7503 for first-time withdrawers leading up to June 30.
That suggests older people with significant super balances are coming back to have a second bite at the cherry in an uncertain economic setting.
And the number of second-time withdrawers may be even higher than APRA’s figures suggest, according to David Knox, senior partner at superannuation consultants Mercer.
“In the second tranche, a lot of people with two funds might be going to their second super fund, likely their active fund, after draining their first and APRA figures won’t show that,” he said.
Still pain out there
“The jump in withdrawal numbers reflects the fact that there is still a great deal of hardship being caused by COVID-19,” said Brendan Coates, household finances director at the Grattan Institute.
“People are worrying, ‘Will I keep my job and will JobKeeper be extended?'”
Some industry observers expected a lower level of withdrawals in the second half of the scheme, as roughly 20 per cent of withdrawers in the first half cleared out their accounts.
“ISA [Industry Super Australia] analysis has shown that almost 500,000 people have already wiped out their super savings. For those [members], it may be very difficult to make up those contributions,” ISA CEO Bernie Dean said.
“The higher amount of average withdrawals on repeat applications may indicate people are taking the maximum available to them, be that what they have in their balance, or the full $10,000 available under the scheme.”
The other surprising thing about the withdrawals in the new financial year is the number of people who have jumped in early.
Almost four times as many people withdrew money in the first week of July (511,000) as the last week of June (127,000).
That’s not far behind the 665,000 applications seen in the first week of the scheme in late April, when the system was swamped by people deeply concerned about their jobs and finances.
Numbers jump up
Although applications blew out, actual payments were made to only 132,000 members, bringing the total number of payouts to 2.54 million, a million more than initial government forecasts.
Total withdrawals reached $19.1 billion by July 5, but a further $3.82 billion will follow the latest avalanche in withdrawals when the latest week’s applications are processed.
The 10 funds with the highest number of applications received from the ATO have made 1.68 million payments worth a total of $12.50 billion.
Withdrawal numbers had been high in the first week, but Mr Knox said he thinks “we will see those numbers tail off in coming weeks as people wanting to withdraw will have drained their funds”.
The rush for second-tranche withdrawals demonstrates that the government needs to introduce checks to ensure withdrawers actually need the funds, Mr Coates said.
“In the first tranche, they had to release funds quickly for people who were suffering hardship,” he said.
“The ATO should ask people to show they have lost their job, suffered an income fall, or are on JobKeeper.”
The New Daily is owned by Industry Super Holdings