ATO called to assist in early release super scheme

The Actuaries Institute has called on the Australian Taxation Office to play a role in spreading the impact of withdrawals from the governments early release super scheme, estimating it will see $25 billion pulled from super.

The government announced it will allow workers affected by the COVID-19 crisis to pull as much as $20,000 out of their superannuation, in two tranches of $10,000 each.

The convenor of the Actuaries Institute's Superannuation Practice Committee, Tim Jenkins, said short-term demand from investors for early access to their superannuation would exceed $25 billion if 1.35 million working Australians each accessed the full amount.

Jenkins said the ATO, which would make the determination on early release, could also distribute payments, and possibly invoice superannuation funds, spreading the impact of withdrawals over time.

"There may be a need for the funds and the government to look at ways to enable early access and smooth out the ability and capacity of funds to pay," Jenkins said.

"A possible solution is for the ATO, in addition to making the determination, to distribute the payments to further streamline the process to get money into the hands of those in need quickly."

"The ATO could then invoice the superannuation funds over the following few months to spread the cash flow impact on funds."

Actuaries Institute chief executive Elayne Grace said the government has had to make difficult financial decisions to balance the short-term health and economic risks to the community against the long-term effect on retirement incomes.

"Early access to super will help ameliorate some of the short-term pressures people, their families and their communities face," Grace said.

"We know large parts of the community have insurance through their super fund. We want people to have access to their funds, to help them through very difficult times, but it is important to know and map the consequences.

The institute said it is encouraging the government to commit to restoring and maintaining the integrity of the retirement income system after the crisis ends."

Australians had about $3 trillion invested in superannuation at the end of the December quarter 2019.

Read more: SuperannuationActuaries InstituteATOAustralian Taxation OfficeCOVID-19Elayne GraceTim Jenkins
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