The long term impact to individuals superannuation accounts due to the COVID -19 pandemic will not be known for many years to come. Building a nest egg for retirement is a compulsory requirement for working Australians, foregoing money now for the future is designed to help Australians become self-sufficient in retirement. The impact of removing superannuation savings now, and potentially forgoing 5 to 7 per cent annual compound returns over the long term may have material impacts to a member’s final balance in retirement.
Recent data released comprising the early super release shows that people aged between 25 to 34 drew down the largest portion of their super balances, drawing almost 35%, followed by people aged between 35-44, drawing almost 20% of their total super balance. There are many reasons why individuals have had to dip into their super balances, ranging from insufficient support, not being eligible for Jobkeeper or not being eligible for Jobseeker. A quote from Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees (AIST) in the Australian Financial Review made mention to the shortfalls “The early release scheme, unfortunately, forced many people to choose between poverty now or poverty in retirement”.