Without replenishing early release amounts total retirement incomes will be significantly lower and the long-term age pension costs borne by taxpayers could be more than twice the present value of the withdrawn early release amounts, the analysis shows.
The promised super guarantee increase must proceed as legislated to help rebuild workers’ retirement balances, as the spike in age pension expenditure would likely be funded by higher taxes.
For a 30-year-old on the median income who draws the full $20,000 through the early release scheme the additional age pension entitlements would be $50,000. For a couple who both draw the full amount it would be $100,000.
But the increase in age pension payments does not cover the lost super, meaning a 30-year-old would still be $41,000 and a couple more than $80,000 worse off in retirement.
The promised super rise is affordable for business and much needed for workers. Separate ISA analysis shows more than 600,000 people accessing their super early have drained their accounts, the vast majority of whom are under 35-years-old.
The findings are a stark warning against changes that seek to make permanent or relax preservation rules, which are there to protect and grow workers’ retirement savings by supporting long-term investments that generate good returns, create jobs and strengthen the economy.
The pension expenditure cameo analysis incorporates all superannuation, tax and transfer policy settings to project outcomes. It can be accessed here.
A recent survey undertaken by UMR shows over two-thirds of Australians support ending the early release of super scheme.
