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Superannuation
ERS extension flagged, criticised

Industry Super Australia (ISA) has called for the end of the government's Early Release of Super scheme after Senator Jane Hume signaled the possibility of a third tranche.

The assistant minister for superannuation flagged the possibility last night ahead of this evening's budget announcement.

ISA has called for the scheme to end, saying Australians will be forced to pay tens of billions more in taxes and suffer lower investment returns if the government opens a third tranche.

The group said its opposition to the scheme is due to its poor targeting and the huge long-term costs on the individual and the taxpayer.

ISA said those who access the scheme will be tens of thousands worse off in retirement and will become more reliant on the aged pension.

Additionally, ISA said its own research shows the scheme has added tens of billions more to the aged pension, heaping pressure on future governments to hike taxes or cut the pension.

"While the scheme helped get funds to people who needed them during the crisis, the limited checking of applications signals many in Canberra also viewed the scheme as a useful economic stimulus," ISA said.

"With JobKeeper scaling back and JobSeeker's future rate uncertain opening up super again would signal the government wants Australians to raid their retirement savings to substitute income support."

ISA highlighted recent changes to income support eligibility saying that accessing super early could result in a Jobseeker applicant having to wait months before receiving government payments.

"There is no free lunch in super and ISA analysis shows that for each dollar taken out of super early the taxpayer forks out as much as two and half times that amount through higher pension costs," ISA said.

"But even after receiving higher pension payments individuals are still tens of thousands worse off."

ISA said that while the super industry supported the original intent of the radical early release scheme as a temporary measure to provide emergency funds to Australians during a global pandemic, it should not be extended further.

"This emergency scheme provided funds to many at an uncertain time but has now fulfilled its purpose and must come an end, the long-term cost is just too great," ISA chief executive Bernie Dean said.

"Extending the raid on super will slug young Australians with a great big new tax to pay for a bloated future pension, drag down investment returns and will shove more Australians towards poverty in retirement.

"Workers should no longer be asked to sacrifice their future to prop up the economy now, there are other levers the government can pull to stimulate spending and get funds to people who need it."

This comes as APRA released the latest ERS figures reflecting a flat lining in the amount of Australians accessing the scheme.

Over the week to September 27, 36,000 applications were received by funds of which 22,000 were initial applications and 14,000 were repeat applications.

Initial applications have reached 3.2 million and repeat applications total 1.3 million since the inception of the scheme.

Since the scheme was launched in April, $33.8 billion has been removed from super.

Read our full COVID-19 news coverage and analysis here.

Read more: ISAERSEarly Release of SuperIndustry Super AustraliaSenator Jane HumeAPRABernie Dean
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