Estimates made by Industry Super Australia (ISA) of early superannuation releases reaching $40 billion look set to be met, despite earlier criticism from government sources that they were way too high.

The assistant minister for superannuation, Senator Jane Hume, told The New Daily that total withdrawals reached $29.7 billion on Thursday.

That money was paid out following applications from 2.55 million people to withdraw up to $20,000 from super, if their finances had been hit hard by the coronavirus.

Withdrawals were able to be made in two tranches of up to $10,000 each – the first from April to June 30, and the second from July 1 to September 24.

The government’s estimate on total withdrawals – made when the measure was launched – were that around 1.65 million people would withdraw a total of $27 billion.

By the end of the financial year, according to APRA, around $20 billion had been withdrawn with perhaps another $5 billion requested but not yet paid out.

Committee disagreements

During recent hearings of the Senate Select Committee on COVID-19, disagreements emerged between a Coalition member and Industry Super Australia (ISA) on the level of the latter’s estimates of early withdrawals.

During hearings on May 28, Deputy Chair of the Committee, the Liberal’s Senator James Paterson, claimed ISA had estimated early release levels would top $50 billion and sought to contrast this figure with Treasury estimates while APRA was giving evidence.

Senator James Paterson thought ISA’s estimates were higher. Source: AAP

ISA wrote to Labor senator and committee chair Katy Gallagher refuting Senator Paterson’s claims.

In a letter, ISA said it had “not released publicly any total estimates of early super release monies to that effect, so we are unsure where the Senator sourced this information from”.

However, ISA did note in the letter that actuaries Rice Warner had estimated total releases between $40 to $50 billion were likely.

ISA estimates lower

ISA has undertaken internal analysis of early super release take-up and aggregate claims to assist regulators and funds to prepare for the scheme.

This analysis, which was updated for the JobKeeper initiative, estimated a central scenario with claims totalling $34 billion and 2.6 million persons for both tranches of the scheme.

ISA wrote to Senator Katie Gallagher. Source: AAP

The upper end of ISA’s internal analysis has claims at $40 billion, which remains well below Rice Warner’s estimates.

While some observers thought the size of withdrawals would diminish as the new financial year emerged, APRA’s latest analysis shows this is not the case.

“The 511,000 applications received by funds during the week from 29 June to 5 July includes a mix of applications received in both the 2019/20 and 2020/21 financial years,” the regulator has reported.

“It is a significant increase in applications compared to the week of 22 June to 28 June, where 127,000 applications were received by funds, reflecting the start of repeat applications in the 2020/21 financial year.”

According to the Association of Superannuation Funds of Australia (ASFA), roughly 65 per cent of early release payments have been made by industry funds, 29 per cent by retail funds, 5 per cent by public-sector funds, and only 1 per cent by corporate funds by the end of the financial year.

Industry funds have the highest levels of withdrawals because they cover the vast majority of workers in hard-hit industries, such as hospitality, retail and transport.

Public-sector fund withdrawals are low because public-sector workers mostly enjoy secure, permanent employment, while the corporate fund figure is low because there are so few left.

ISA has estimated that with months still to go until the scheme ends, some 480,000 Australians would have drained their super funds completely by withdrawing early.

And of those, 395,000 members are under the age of 35.

The New Daily is owned by Industry Super Holdings