New analysis from Industry Super Australia has suggested that the long-term age pension costs borne by taxpayers could be more than twice the present value of the withdrawn early release amounts.
According to ISA, a 30-year-old on the median income who draws the full $20,000 will be entitled to additional age pension entitlements of $50,000. For a couple, that figure doubles to $100,000.
However, while the taxpayer will foot the bill, it won’t even cover what the individual lost by raiding their super. A 30-year-old would still be $41,000 and a couple more than $80,000 worse off in retirement.
“People know that by upending the whole purpose of super and then cutting contributions, the government is thinking about the short term and ignoring how it will lumber people with tax hikes to support millions more scraping by on the pension,” said Industry Super Australia chief executive Bernie Dean.
“The community knows the government’s dealing with a crisis, but it doesn’t make sense to backflip on the promised super increase when you’ve just let people raid their savings to prop up spending.”
With over 600,000 people set to drain their super accounts, the vast majority of whom are under 35 years old, ISA has warned against changes that make permanent or relax preservation rules.
“This is just reckless, and the community can see that from a mile away. How else do politicians think people are going to rebuild their nest egg and avoid working until they drop?” Mr Dean said.
“Rebuilding balances now is critical to avoiding the worst impacts of higher axes, less in retirement and a slower economy.”
According to the latest figures from APRA, 4.3 million withdrawal applications have been made, of which 1.2 million are repeat applications, pulling $32.2 billion out of people’s savings.