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Few funds immune to ERS

Fears super funds with memberships concentrated in the industries hit hardest by the COVID-19 shutdown would feel the pain of early release more are proving largely unfounded, with  funds of all kinds seeing withdrawals.

While much speculation surrounded how the industry funds with high concentrations of members in sectors like tourism, hospitality and retail would fare, APRA's fund-level data on the super early release scheme showed funds with very diverse membership bases also had significant volumes of early release applications.

Australia's largest fund, AustralianSuper, had paid out $763 million by May 3 and has hit $1 billion since. Sunsuper had paid $784 million by May 3. Hostplus and Rest were not far behind on $661 million and $584 million respectively. Hostplus has since told members applications now total $1.04 billion.

AustralianSuper and Sunsuper both have relatively diverse member bases.

It seems the economic pain driving early release is being felt in all corners.

The Australian Bureau of Statistics revealed this week that employment fell by 594,300 people between March and April this year.

A further 600,000 were left underemployed after having their hours cut.

While the numbers for retail funds were slightly more subdued, they were still significant.

Colonial First State had paid out $473 million to members by Friday,May 7.

CFS general manager product, marketing and remediation Kelly Power said those figures are in line with CFS' expectations.

"CFS supports measures the government has put in place to help Australians in this time. We are committed to helping our members who are facing uncertainty and hardship," Power said.

The average request for CFS, as with most funds, was well below the $10,000 limit and Power thinks that's a good sign.

"Rather than taking out the full $10,000, it turns out Australians are being very careful and taking out what they really need to," she said.

"The average redemption request has been $7200 which suggests people are using their money for specific debts while trying to preserve their nest egg."

However, she added that on average members are drawing down about half of their account balance.

This is in line with what Industry Super Australia chief executive Bernie Dean told the House of Representatives standing committee on economics about low balance members accessing early release.

Dean said ISA research had found about 5% of early release claims left account balances at $0 and it expects that number to go up as the scheme continues.

"It's important to understand, the younger you are, the more time you have to repair your superfund," Power said.

"For a lot of people, withdrawing their super is not an academic exercise. People need the money."

The APRA data showed BT Retirement Wrap had paid out $314 million in early release claims as of May 3. This wrap data encompassed applications across different BT products including BT Super for Life and BT Super.

BT general manager of superannuation Melinda Howes said with 810,000 members and $69 billion in FUM making Retirement Wrap the ninth biggest fund in the country the applications are not outside expectations.

"BT has a diverse membership, with individual members and employer plans sourced from across the economy," Howes said.

"This is an extremely difficult time for many Australians as the impacts of COVID-19 continue. The volumes are not beyond the levels expected across the industry but they do show just how tough it is for many people right now."

The data also showed funds catering predominantly to essential services are also seeing withdrawals.

For example, HESTA - the membership of which is comprised of a significant number of healthcare and aged care workers - saw more than $230 million requested in the week to May 3.

Meanwhile, Military Super also saw $30 million in redemptions and Energy Super has so far paid out at least $12.6 million.

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

Read more: BTCFSAPRAAustralianSuperHostplusSunsuperBT Retirement WrapKelly PowerBernie DeanBT Super for LifeIndustry Super AustraliaMelinda HowesAustralian Bureau of StatisticsColonial First StateEnergy SuperISAMilitary Super
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