The AIST has called for the government to make a one-off contribution of not more than $5,000 to the superannuation accounts of low-income earners who accessed their super early in order to address the burgeoning retirement gap.
“The early release scheme unfortunately forced many people to choose between poverty now or poverty in retirement,” said AIST CEO Eva Scheerlinck.
“These vulnerable Australians are unlikely to recover from this without targeted policy interventions… catching up contributions later in their working life will cost significantly more than the amount withdrawn and will be difficult to achieve for many low-income earners.”
Research produced in partnership with Mercer found that the early release scheme would have an estimated impact on retirement balances of $100.2 billion, equating to $83.8 billion in lost investment earnings and an estimated $16.4 billion in lost contributions.
“It is crucial that we investigate and understand the [longer-term] consequences of the early release scheme,” said Dr David Knox, senior partner at Mercer.
“The preservation of superannuation assets until retirement represents a fundamental feature of the best pension systems around the world. Any early access to these savings should only be permitted in exceptional circumstances.”
The AIST also warned that the legislated increase in the super guarantee must go ahead in order to provide “crucial relief” from the impacts of the super gap. The comments come as Prime Minister Morrison said that while the government had not made a decision on the legislated increase, it was aware of concerns that it could impact wage growth as Australia recovers from the COVID crisis.
“It is the circumstances that have occurred since the election which have made that the case, and prior to the election it was certainly my view and I articulated that that those were legislated changes and increases and we had no plans to change any of those and that was certainly our view,” Mr Morrison told media.
“COVID-19 has occurred, people’s jobs are at risk and I note, whether it’s Ross Gittins or any number of others who’ve spoken on this issue, normally those you wouldn’t necessarily put in the same group as being agreeing on everything seem to be agreeing a lot on that.”
