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Early release super scheme hurts the young and low paid
Those Australians who can least afford it will be hit hardest by an estimated $100 billion COVID super shortfall in retirement savings. Latest analysis by the Australian Institute of Superannuation Trustees (AIST) shows low paid, young Australians, women, and casual workers are disproportionately represented among applicants for the COVID early super release scheme.
AIST CEO Eva Scheerlinck says the scheme has forced many people to choose between poverty now or poverty later. “These vulnerable Australians are unlikely to recover from this without targeted policy intervention,” she added.
The data reveals members who made early release applications had an average of 20% less super savings than those who didn’t apply, and those aged under 35 withdrew a third of their total super balance.
It’s also estimated another 15% of members under 35 completely drained their super before 30 June. On average, women withdrew more super than men, accounting for a higher portion of their already lower super balances.
“Given the difference compound interest makes, a withdrawal made at a younger age has a big impact on retirement balances of this generation,” Ms Scheerlinck said. “Catching up contributions later in their working life will cost significantly more than the amount withdrawn and will be difficult to achieve for many low-income earners.”
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