Almost 100,000 superannuation accounts have been completely drained after the government allowed them to be accessed early
- Statistics show that between 95,000 and 73,000 super accounts are now empty
- More than $11billion has been taken out since government early access program
- Many Australians re-organised their accounts to save on premiums and fees
- This may lead to an increase in administration fees to subsidise running costs
- Here’s how to help people impacted by Covid-19
Nearly 100,000 superannuation accounts have been completely drained of savings after the government allowed the funds to be accessed early.
Data from super funds Mercer and Link Group, who respectively had seven and 5.4 per cent of accounts exhausted, found between 95,000 and 73,000 super accounts are empty throughout the country.
More than $11billion has been withdrawn from super accounts since the government program was introduced to help Australians in financial stress during the coronavirus outbreak.
Drained accounts have sparked fears that administration fees could increase, with Mercer interim chief executive Jo-Anne Bloch telling the Australian Financial Review that was ‘a very real conversation’.
There have been more than one million people who have accessed their super accounts, with most of those coming from young workers who were laid off due to COVID-19.
Data from super funds Mercer and Link Group found between 95,000 and 73,000 super accounts are empty throughout the country (stock image)
This has led young savers to rationalise their accounts and remove other forgotten accounts to save on fees and premiums through the Productivity Commission.
Forgotten super accounts turn in a $2.6billion bill annually, with the uncertain coronavirus market leading thousands of customers to re-organise their finances and effectively slash automatic charges incurred on unintended accounts.
Ms Bloch said members with multiple accounts are no longer funding the overall super pool, which could lead to a rise in fees to subsidise funds operational costs.
‘It’s a difficult situation,’ she said. ‘Everything is going up except membership.’
The early access scheme was blocked last week after allegations of fraudulent withdrawals, with the Australian Federal Police making inquiries on more than 100 cases.
The coronavirus pandemic is expected to result in a $50 billion hit to the Australian economy in the June quarter.
Treasurer Josh Frydenberg says Treasury also expects the staged lifting of restrictions will cost $9.4 billion a month after July, while household consumption could drop 16 per cent and business and dwelling investment 18 per cent apiece from pre-crisis levels.
It also anticipates unemployment rising to 10 per cent.
Australian Industry Group boss Innes Willox said governments must be willing to challenge and change old ways of thinking as they look towards the economic recovery.
Treasurer Josh Frydenberg (pictured) said running through the stages of eased coronavirus restrictions will cost $9.4 billion a month after July
‘Conversations around policy change which were previously consigned to the too-hard basket need to be reconsidered,’ he said.
‘Changes in approach need to take account of competitiveness, productivity, growth and fairness.’
New data for wages growth in March out on Wednesday and labour force figures on Thursday are expected to add to the gloomy picture.
CommSec chief economist Craig James said the latter numbers could challenge consumer sentiment, which has continued to improve from record lows when the virus first hit Australia.
‘Optimism that we may have seen the back of the worst of the pandemic and an easing of lockdown restrictions have likely boosted consumer morale,’ he said.