Early release of superannuation: ASFA dives into the stats

6 min read
6 min read

The early release scheme

The Coronavirus Economic Response Package Omnibus Bill 2020 received Royal Assent on 24 March 2020 and became law, and will remain in place until 24 September 2020.

You know the substance of it – the changes allow eligible employees and contractors who have had their hours cut or lost their jobs altogether to submit two applications for up to $10,000 each from their superannuation fund, one each in the 2019–20 and 2020–21 financial year.

The Government expected 1.6 million to apply, and there’s been a lot more already. Trance 2 will make the number even higher.

Potential claims: how many jobs are affected by COVID-19

ASFA estimates 2.5 million people either lost their job or saw a reduction of 20 per cent or more in hours in April, and thus were eligible for the new early access measures. That number has been increasing since April.

It includes 607,400 jobs lost during April, and of those who remained employed, around 1.8 million worked less hours than usual – a massive increase of about 1.4 million. Of the additional 1.4 million, about 500,000 did not work at all (but were still retained by their employer). Using these numbers, at the end of May, the number of individuals eligible for early release of their superannuation could have been approaching 3 million.

During June, potential further job losses were somewhat offset by the reopening of some businesses. Beyond June, employment conditions and thus those eligible for early release are hard to predict. Also, the late June spike in cases in Victoria and consequent return of some restrictions shows the potential for a tightening of restrictions.

How many have applied for early release

Around 20 per cent of the labour force and about 15 per cent of the total number of individuals with a superannuation account are expected to receive early release payments.

Applications for early release were continuing to flow to the ATO at a substantial 150,000 per week in the second half of June, though that’s well down on the nearly 700,000 applications made in the first week. Based on that flow, the total number by 30 June might be about 2.5 million, equivalent to about $18 billion for the 19/20 financial year and nearly 19 per cent of the labour force. Another spike in applications can be expected from 1 July when the second tranche of releases becomes available. The ATO website actually had a meltdown on 1 July but people lodging tax returns would also have contributed to that.

Industry, retail funds dominate early release over public sector funds and SMSFs

APRA data shows that the bulk of early release payments have been made by industry funds. Industry funds account for around 65 per cent of payments by value, with retail funds accounting for around 29 per cent. Public sector funds account for about 5 per cent. Only around 1 per cent of early releases are from corporate funds.

There is a relatively low incidence of early release payments in most public sector and corporate funds as the bulk of their members are still working.

The volume of early release payments from SMSFs is not likely to be high. Over 40 per cent of SMSF members are retired and/or are of an age where unconditional release is possible. Also, SMSF members are older and wealthier on average compared to fund members more generally.

What kind of members are applying for early release?

Not surprisingly, funds with many members employed in hospitality, restaurants and clubs have the highest rates of early release so far, at between 15 and 20 per cent of their accounts. Funds whose members are concentrated in public sector employment have very low rates of early release, at three per cent or less of member accounts.

Somewhat surprisingly, funds with membership concentrated in health related services have had substantial numbers of applications, at about 11 per cent of accounts. Many casual and part-time health workers have had reduced hours or no employment due to the cancellation of many forms of elective surgery.

The largest work hour reductions (in percentage terms) have been in accommodation and food services, and arts and recreation services, as shown by the charts below. Financial and insurance services bucked the private sector trend with an increase in employment between 14 March and 2 May, reflecting the uneven impact on different sectors of COVID-19. Job losses in health services, education and training, and public administration were relatively modest in percentage terms. Casual employees in those sectors, however, in many cases have endured a significant impact on the hours worked and paid for.

Chart 1: Change in number of payroll jobs, from 14 March to 2 May
Chart 1: Change in number of payroll jobs, from 14 March to 2 May

Note: Number in parentheses is the share of total employment (in % terms) for each industry.

Chart 2: Number of payroll jobs, selected industries

The age and gender distribution of applicants for early release

Table 1 below shows most applications (52 per cent) have been made by those aged under 35. Many younger people are employed in industries particularly affected by the downturn in employment, such as retail and hospitality. They are also less likely than older age groups to have other forms of accessible savings.

Table 1: Early release applications by age band

Age range Number of applications
20 or less 23,400
21 – 25 172,100
26 – 30 268,000
31 -35 247,700
36 – 40 198,500
41 – 45 150,800
46 – 50 134,300
51 – 55 101,200
56 – 60 58,800
61 – 65 15,700
65 – 70 1,000
71 and over 200
Total 1,371,900


The amount left in accounts after the early release payment

Some individuals, especially those in older age groups, have substantial superannuation balances.  However, many of the younger applicants in a recent ASFA survey did not. Around 25 per cent of applicants had a balance under $6,000 after taking money out through early release and around 40 per cent had under $10,000.  Around 5 per cent to 10 per cent had a nil or very low balance.

This not only leaves relatively little for any further release after 1 July, but also for the eventual retirement savings of the individuals concerned.

Why compulsory superannuation will matter more

ASFA has estimated that compulsory superannuation has led to household savings being around $500 billion higher than they would otherwise have been, and is particularly important for low income and younger people.

For these Australians, the net impact of each dollar of saving via compulsory superannuation is much higher than the average for all employees. Lower income households tend to consume a greater share of permanent extra income, consistent with the idea that they just don’t save as much because of cash flow constraints.

Compulsory superannuatio
n has resulted in employees aged under 35 having additional savings approaching $100 billion in total, or around $22,000 per person. Through the early release provisions they have therefore had access to significantly more savings at a time of need. For many, however, the fallout is the withdrawal of almost all of their biggest financial asset, jeopardising their future retirement funding. The potential calamitous impact of our younger and lower income members emptying their retirement savings through early release reinforces the case to move the Superannuation Guarantee rate to 12 per cent as soon as possible. This will help provide adequate retirement savings and also financial security for individuals in times of extreme financial need beyond COVID-19.

For more details on the impact of COVID-19 early release on retirement savings and what can be done, read the research paper here.

Picture of By Ross Clare

By Ross Clare

director of research

More Reading

Q&A with IFM Investors’ David Whiteley
In-Depth In-Depth

Q&A with IFM Investors’ David Whiteley

Super system can turbocharge productivity on road to net zero
In-Depth In-Depth

Super system can turbocharge productivity on road to net zero

Understanding the Division 296 super tax
In-Depth In-Depth

Understanding the Division 296 super tax

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.