More than half a million Australians are estimated to have "completely cleaned out" their superannuation savings during the COVID-19 crisis, as Treasury predicts workers will withdraw a total of $42 billion under the early-access scheme.
Treasury had initially estimated $29.5 billion would be accessed but it's radically revised that forecast up to $42 billion to reflect the Federal Government's decision to extend the scheme until the end of the year, in light of Victoria's second coronavirus lockdown.
Treasurer Josh Frydenberg said more than 2.6 million Australians had benefited from the early access to their super and hit back at opponents of the scheme.
"We know that almost 60 per cent of those accessing their super early have used it or plan to use it to meet essential day-to-day expenses, including paying down debts, with another 36 per cent adding the money to their savings," he said.
Last week's economic update revealed the early-access scheme would cost the federal budget $2.2 billion over five years.
Industry Super Australia chairman Greg Combet acknowledged the scheme was helping many people struggling financially but said any attempt to extend it beyond December 31 would be fiercely resisted.
"The industry funds would not support a further extension of this early-access scheme," he told the ABC's AM program.
"We need to draw a line under it once this current period of eligibility is over."
Mr Combet, a former Labor government minister and ACTU secretary, said initial estimates suggested 560,000 Australians had "completely cleaned out" their superannuation accounts, 460,000 of them under the age of 35.
"That's creating a big problem for them down the road in their retirement and also for taxpayers, it pushes people back on the pension and increases the tax burden," he said.
While proponents of the scheme have argued it was the "workers' money", Mr Combet said superannuation savings were given favourable tax treatment and were designed to be preserved until retirement.
His comments come as Mr Frydenberg considers the findings of Treasury's Retirement Income Review, commissioned late last year to analyse the state of the system and how it is likely to perform as the population ages.
The ABC understands the lengthy and detailed document does not contain any recommendations but is designed to inform the Government's thinking on reforms, 27 years on from the introduction of compulsory super.
There are fears the Government will use the review to again freeze the superannuation guarantee, the compulsory contribution which is legislated to increase from 9.5 per cent to 10 per cent next financial year.
Mr Combet said if that contribution was frozen at 9.5 per cent, a 30-year-old man on an average income who withdrew $20,000 from his super under the early-access scheme would be left $180,000 worse off by the time he retired.
Source: AMP Insights