The economic disadvantage being suffered by today’s under 35s risks being significantly magnified by fall-out from the COVID-19 pandemic, not least the Government’s hardship early release superannuation regime.
That is one of the assessments contained in the Actuaries Institute’s Intergenerational Equity Index which nominated early release super as being part of a suite of problems which will beset under 35s and hold back their ability to build wealth.
The report, released this week, pointed to conditions being driven by the COVID-19 pandemic, not least reduced employment opportunities and income, particularly for younger people.
It also noted that net savers, including retirees living on superannuation asset income, were seeing reduced income due to lower interest rates.
The report then noted, “Superannuation balances diminished through the facility to access accounts as part of COVID-19 emergency measures, with younger people (aged 35 and under) being the largest group by number to access their accounts”.
“An economic downturn and increased unemployment will also reduce super contributions, ultimately disproportionately impacting the projected super balances of young people,” it said.
“High current government expenditure (including increased payment rates for benefits such as JobSeeker) will likely mean increased net government debt, potentially reducing future fiscal spending and increasing future taxes. This will impact younger generations more,” the Actuaries Institute paper said.
The Actuaries Institute report was released at the same time as the latest Australian Prudential Regulation Authority (APRA) data around the Government’s early release superannuation scheme indicated a slowing in activity, particularly with respect to those seeking a second release of funds.
The APRA, covering the first week or August, pointed to 44,000 people making initial applications for early release in the week to 9 August, together with 45,000 who made repeat applications.
It said that total payments under the scheme had reach $31.1 billion with the average payment being for $7,689.
