Revealed: The HUGE price young Australians will pay if they access $20k from their superannuation during the coronavirus crisis
- Australians warned they risk wiping at least $100,000 off retirement savings
- Two tax-free withdrawals each up to $10,000 can be made this year and next
- But super industry bodies urged young Australians to avoid liquidating supers
- A 20-year-old could lose $120,000 by removing $20,000 from a super account
- Coronavirus symptoms: what are they and should you see a doctor?
Young Australians have been warned they risk wiping at least $100,000 from their retirement savings if they withdraw money from their superannuation during the coronavirus pandemic.
Prime Minister Scott Morrison announced on Sunday the unemployed and Australians who had lost their jobs to the effects of the virus can withdraw $10,000 tax-free this financial year and the same amount the following year.
But a super industry body has warned a 20-year-old could be down $120,000 by the time they reach retirement simply by withdrawing the tax-free allowance.
People queue up outside a Centrelink office in Abbotsford in Melbourne’s inner-city. Struggling Australians have been offered early access to their super funds during the coronavirus pandemic, but industry bodies have warned them to think twice before liquidating their accounts
Industry Super Australia said money left in a super account would earn back value in future years.
‘Taking your super now is like selling a house at the bottom of the market – you’ll lose money you would probably claw back over time,’ ISA chief executive Bernie Dean told The Australian.
The Association of Superannuation Funds of Australia has also recommended taking fund out of a super account only after other savings and government support had been depleted.
It is estimated the almost $1trillion held in equity by super funds overseen by the government regulator will have lost almost a third of its value in the year to December.
ASFA chief executive Martin Fahy said an account worth $40,000 a few months ago could have dropped in value to as little as $22,000 and urged Australians to reconsider liquidating at this stage.
The early access will also apply to workers who have lost more than 20 per cent of their income, and the government has estimated the changes could inject up to $27billion worth of cash into the economy.
A long queue outside a Centrelink Service Centre in Sydney on Monday. The Association of Superannuation Funds of Australia said taking money out of a super account should be considered only after other savings and government support had been depleted
The government has estimated the changes to super withdrawals could inject up to A$27 billion worth of cash into the economy
ASFA deputy chief executive Glen McCrea said a high number of workers were already trying to access their superannuation, even though funds will not be available until after mid-April.
On Monday night, the federal parliament passed coronavirus economic stimulus measures designed to cushion the sledgehammer blow of COVID-19 – which has killed seven people in Australia and infected 1,886 people.
A series of bills was approved with two packages worth $17.6 billion and $66 billion at the heart of the Morrison government’s response.
Coronavirus cases soared to 1,886 on Tuesday
In separate legislation, the government set aside a further $40 billion for urgent and unforeseen spending associated with the pandemic, likely to cause a recession.
Jobseeker, youth allowance, parenting and special benefit payments will be boosted by $550 a fortnight.
Finance Minister Mathias Cormann confirmed the coronavirus supplement would be extended to full-time students.
The government will no longer need legislation to make changes to welfare settings after passing an amendment to the package, giving the social services minister unprecedented powers.
There will also be two $750 payments for welfare recipients.
Small lenders will get a $15billion boost from the government while businesses will get cash injections to encourage them to keep staff on during the crisis.
A range of other measures are included in the packages, including targeted support for the tourism and aviation sectors.