Younger Australians face a second-class retirement or working until they drop after draining their super accounts during the coronavirus crisis, Industry Super Australia says.
ISA estimates that about 480,000 Australians have completely drained their super accounts under early access rules that allowed people hurt by the coronavirus-driven economic recession to withdraw up to $10,000 from their retirement savings.
The body, which represents union- and employer-controlled super funds, said it estimated that 395,000 –or more than four out of five – of those draining their accounts were under 35.
Workers were given the opportunity to withdraw an additional amount of up to $10,000 on Wednesday, the first day of the new financial year.
The Australia Taxation Office website through which applications for early release must be lodged buckled under high traffic load on Wednesday, although it was unclear whether this was due to early withdrawal requests or people lodging tax returns.
An ATO spokeswoman said the agency was “aware that people trying to lodge their tax return or an application for early release of super are currently experiencing issues with our systems”.
“We are investigating this as a priority, and our technicians are working to resolve the issue,” she said.
The ISA’s chief executive, Bernie Dean, said early withdrawals were particularly damaging to young people because they were robbed of decades of potential growth.
“This super wipe-out data shows that we may be on the way to condemning a generation of younger Australians to a retirement far worse than one workers get now,” he said.
He said if early release were combined with a decision to freeze employer contributions to super society would be “ripping away the promise of a comfortable retirement for young Australians”.
“We don’t want the lasting legacy of this pandemic to be a generation of Australians who will have to work until they drop,” he said.
Employer contributions are legislated to increase from 9.5% to 10% next year, and to 12% by 2025, but the increase is opposed by a ginger group within the Coalition amid a debate over whether companies or workers ultimately bear the cost.
“The community will not take too kindly to politicians, who receive 15% super, mandating that 9.5% is fine for the average worker,” Dean said.
The office of the treasurer, Josh Frydenberg, has been contacted for comment.
About 2.1 million people have so far withdrawn a total of $15bn under the coronavirus hardship provisions.
ISA said this was a larger number of people than the 1.65 million estimated by the government, and total withdrawals were on track to eclipse the $27bn predicted.
It estimated the number of completely drained accounts by cross-referencing data on drawdowns supplied by the Australian Prudential Regulation Authority with data on super balances held by the ATO.
Twenty per cent of Queenslanders with super balances had drawn out money, it said –higher than the national average of about 15%.
The Australian Capital Territory had the lowest proportion of people seeking early release, at 8%.