- Using the government's early access to super scheme, 400,000 Australians under the age of 35 have withdrawn the entirety of their retirement savings, according to estimates from Industry Super Australia.
- That number is expected to rise with Australians able to make a second withdrawal of $10,000 from 1 July.
- With applicants able to make a self-assessment and thus access the scheme even if ineligible, ISA chair Greg Combet said he hopes the ATO will more "carefully monitor" applications this time around.
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Anxious about their finances or simply opportunistic, young Australians jumped at the chance to crack open their super.
Around 480,000 people have withdrawn their entire super balance under the government's early access scheme, according to estimates from Industry Super Australia.
"It was very hard to predict how many people would withdraw how much money but after the first round of $10,000 withdrawals it certainly raises some concerns," chair Greg Combet told ABC Radio on Thursday, noting the vast majority were young.
"400,000 people under 35 years of age appear to have completely wiped out their super accounts and there could well be a lot more," he said.
The ATO's website crash on Wednesday may well indicate just that. The rush to withdraw a second allotment of $10,000, an option made available from July 1, would have been a major factor behind it, Combet suggested.
In total, more than $17.1 billion has been paid out to some 2.3 million applications, many of whom may not have been eligible and yet were approved with minimal scrutiny.
"It's been put together fairly hurriedly and we've now learnt it's been a self-assessment process as to whether you're in hardship," Combet said.
Given the ATO is now on the warpath to review its mistakes, Australians could soon face hefty tax bills and $12,000 fines if they're found to have wrongfully drained their super funds.
While conceding Australians are experiencing financial hardship in what are "unprecedented circumstances", Combet said the "significant policy change" could have long-lasting ramifications, and could push more people onto the aged pension.
"The purpose of the superannuation system when it was established 30-odd years ago was to have a tax-advantaged form of savings so that in retirement you'd have a better standard of living. Crucial to that is the preservation of the contributions that are made into your super account," he said.
"It's going to have a very big impact ... particularly on young people and women, and it's going to be very very tough to make it up."
With the new financial year offering a second pass at super balances, Combet said he hoped the ATO would more "carefully monitor" applications.
"We're certainly hopeful that in this second round of withdrawals... [that the ATO] has a careful look of the eligibility of those applying and match it with other ATO data," he said.
With a spokesperson telling Business Insider Australia that it was "always the ATO's intention" to review approvals after the fact, it's unclear how much will change in round two.
- Some Australians have been trying to use their early super withdrawals to get onto the property ladder, mortgage brokers say
- An Australian couple almost had $20,000 of superannuation stolen. The scam has exposed serious flaws in the federal government's early access scheme.
- The government is allowing Australians to access up to $20,000 of their superannuation early. Here's why it's a bad idea.