Women appear to be the biggest losers of the federal government’s early access super scheme.
Already more than $11 billion has been withdrawn, many applicants accessing the full $10,000 they’re able to this financial year.
That sum total is set to creep up in coming months as a second application can be made in the new financial year for another $10,000.
Exclusive analysis by AMP of its customers’ applications shows women are withdrawing slightly less than men but on average, they’re taking out 21 per cent of their starting super balances compared to 17 per cent for men.
AMP found that 14 per cent of women are clearing out their entire super balance as a result of the withdrawals compared to 12 per cent of men, further increasing the gender gap.
Women already end up with about a third less superannuation than men but the early withdrawal scheme appears to be exacerbating that.
For single mother Valerie Foley, the scheme offered a lifeline.
The freelance producer said while she was fortunate to keep her job, she had to take a 30 per cent pay cut because of the pandemic. She doesn’t know when or if she’ll return to her full salary.
“As much as I’m scared about my future, very scared about my future, it seemed like the most reasonable thing to do to stay alive,” she told 9News.
She tried to get some rental relief from her landlord but in the end, decided to withdraw $10,000 from her super to move to a cheaper property and keep paying her bills.
Ms Foley said as much as she’s concerned about the impact on her retirement savings, she needed the money to survive now.
“I don’t have debt, which is kind of cool, but I don’t have any savings or anything so my super was really the only option to stay functioning.”
She may withdraw a second lot of $10,000 in coming months but will look to make additional contributions down the track to return as much of the money as she can.
“I’m 51; I don’t have that many working years left,” she said.
The process was “frighteningly simple” with few questions asked but she was immensely grateful to be able to access her money.
Lara Bourguignon, AMP’s Managing Director, Superannuation, said the early release scheme has helped many women but could put them further behind in the long run.
“We know that women are already behind men in a number of financial measures, including longer-term savings, retiring with 31 per cent less super at retirement. This is being further impacted by their greater proportion of early super withdrawals,” she said.
But there are simple strategies to help.
Ms Bourguignon recommends using government assistance where possible, planning for the future using tools like ASIC’s MoneySmart retirement planner calculator and checking eligibility for the low income super tax offset (LISTO) if your finances have changed.
LISTO is a government super payment of up to $500 per year to help low income earners save for retirement.
For people who have earned less than $37,000 it will happen automatically when they lodge their tax return, providing the super fund has a copy of the super member’s tax file number.
Low to middle income earners could also be eligible for an extra $500 from the government via super co-contribution.
Other ways to rebuild your nest egg include spouse super contributions where one spouse contributes an amount of money into their partner’s super. Providing the receiving partner is a low to middle income earner, or unemployed, the contributing spouse may be eligible for a tax offset.
And consider making additional super payments when employed because small salary sacrifice contributions could make a big difference over the long term.
Just beware there are caps to how much can be contributed to super each year and various tax rules apply.
AMP is one of the nation’s largest super funds in terms of members with 1.5 million.