The superannuation sector has been called on to act as a key pillar in Australia's response to the COVID-19 pandemic, with the early release of super a central tenet of the government's new policy initiatives.
The government's latest suite of stimulus measures designed to handle the outbreak's economic fallout were announced on Sunday afternoon, including the early release of super for Australians in financial stress as a result of COVID-19.
Eligible Australians will be able to draw up to $10,000 from their super accounts for the rest of this financial year, as well as an additional $10,000 over the 2020-21 financial year.
The measure is expected to cost the budget up to $1.2 billion over the forward estimates, with the government set to allow Australians to access the funds tax-free. Additionally, the release of super under these circumstances will not impact an individual's Centrelink or Veterans' Affairs payments.
The government will also temporarily reduce super minimum drawdown requirements for account-based pensions and "similar products" by 50% for the rest of this financial year and 2020-21.
The announcement comes after Financial Planning Association of Australia chief executive Dante De Gori called for the government to reduce the annual minimum payment amount for superannuation income streams in a missive he fired off to government last week.
De Gori said retirees should be afforded the "opportunity to offset some of the losses they had incurred through the market falls and strengthen their financial security for the remainder of their retirement".
The superannuation sector's response to the government's decision has varied, with the industry super movement quick to point out the government's decision to allow early access to super came without the consultation of industry funds.
However despite that, Industry Super Australia said its members stood ready to engage with the government and the Australian Tax Office to "make it work".
"As we have been indicating publicly, this is an issue that must be handled very carefully in order to prevent the compounding of liquidity pressures that may be faced by superannuation funds in the current market conditions, and as they support anxious members," ISA chief executive Bernie Dean said.
"Assisting those in financial hardship will come down to how well the ATO works with the funds, given each superannuation fund will have to manually issue the money.
"Effective co-ordination from the government and the ATO will be vital to ensure the scheme works efficiently and does not frustrate people further remembering that the workforce of many funds are working remotely just like other affected businesses."
The Financial Services Council said it supported the package - which also includes another reduction to social security deeming rates to reflect the 25bps cut of the RBA last week - with FSC chief executive Sally Loane commenting the council was committed to working with all stakeholders to understand the potential impact of the measures.
"Accessing superannuation should not be the default response to providing income support for Australians in need over the short term, so we are pleased to see that this is a temporary measure as part of a broader income support package," Loane said.
"Also, the decision to support retirees at this time by temporarily reducing minimum drawdowns and halving social security deeming rates is a welcome acknowledgement that it is inappropriate to force individuals to crystallise investment losses in a volatile market.
"We urge the government to continue working with the superannuation sector as we focus on safeguarding the retirement savings of Australians through this period of uncertainty, and look toward the industry's role in investing to support the economic recovery effort."
FSC chair and MLC wealth chief executive Geoff Lloyd said the measures reflected the strength of the super system, "and the fact it was built for the wellbeing and livelihoods of Australians".
"This is a sensible package of temporary measures which recognises super is people's money, it's the savings of working Australians," Lloyd said.
"In extreme times like this when people unexpectedly face financial hardship, it [superannuation] can and should be used."
Lloyd called for the patience of super members while details and processes were finalised and put in place for those suffering severe financial hardship.
"Unlike many countries which don't have a mature, national, mandated retirement saving system, we are in a position to make a 'Team Australia' response," he said.
The Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck also weighed in, and said the package would have "potentially far-reaching implications" on Australians and the broader economy.
"AIST is acutely aware of the significant upcoming need for a large number of members of our funds to be provided with income support due to the impacts [of] COVID-19 on their income. We stand ready to support the Government and our member funds in assisting impacted Australians at this time," Scheerlinck said.
"We are also aware that to ensure good long-term outcomes for all Australians as well as the wider economy, accessing superannuation should be done as a last resort, and the mechanism by which members' savings are accessed should avoid locking in current losses for members, and be administratively tenable.
"AIST will work closely and constructively with our member funds, the government and regulators to address a number of administrative challenges and risks that will need to be overcome and mitigated for income support measures to be implemented in an orderly and effective way."
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