Early Release Super and Young Women
HESTA data has confirmed that on members accessing their super under the early release super scheme.
Data revealed a high proportion of younger women.
This has “effectively drained” their super by the Early Release Super.
Young women and has dramatically affected their retirement income.
So, the early release super scheme that has become available, and the data collected revealed has decreased affecting many young women.
Most of their balances have decreased between 60 per cent and 78 per cent.
The fund reported members aged between 18 and 24 had virtually drained their accounts.
This is leaving young women with a median account balance of $1,049, a median decrease of around 78 per cent.
Young Women Most Affected By COVID 19 Pandemic
Young women are particularly affected due to their overrepresentation.
In crisis affected industries such as retail, hospitality and childcare as well as in casual employment.
Job losses are heaviest in accommodation and food services where 40 per cent of those losing work are young people aged 20-29.
Women make up over half of the 950,000 casual employees ineligible for income support payments.
Accessing Early Release Super
Accessing early release superannuation may offer tempting relief for those experiencing financial stress due to job loss.
Also income support payments such as Job Keeper and Job Seeker.
What’s changed to Job Keeper and Job Seeker?
The government’s review into JobKeeper found that around one-in-four Australians on JobKeeper were receiving a pay rise of, on average, $550 per fortnight.
Over six months, that equates to a $6,600 pay rise.
It’s this situation that Finance Minister Mathias Cormann referred to as an “adverse incentive”.
Shadow Treasurer Jim Chalmers points to unnecessary exclusion from JobKeeper as the reason why young people are being forced to withdraw from their super.
Here are some suggestions of what Young women can do and contemplate before withdrawing their super.
If you’re receiving JobKeeper now…
The $1,500 per fortnight rate will continue until its legislated end date, which is 27 September.
The rate will be reduced to $1,200 per fortnight, or $750 per fortnight for those working less than 20 hours a week.
For the March quarter next year, that payment will be revised down to $1,000 per fortnight for those working full-time.
And, or $650 for those working less than 20 hours a week.
Reference:
https://au.finance.yahoo.com/news/jobkeeper-march-what-means-012859696.html
Early Release Super Seek Advice First
Young women should seek financial advice and look at all other suggestions first.
Here is a report by the Australian government for women who want to understand their finances better.https://financialcapability.gov.au/files/women-understanding-money.pdf
Alternative ways to protect your finances.
There are a range of alternatives that Australian young women considering withdrawing super early.
You may want to do before they dip into their nest eggs.
Especially those feeling the financial pinch from the COVID-19 pandemic.
1. Talk to your bank
If you’re concerned you won’t be able to pay your bills, reach out to your bank now.
Your bank can help to set up payment plans or hardship support, to help avoid future damage to your credit report through potential defaults.
Many banks are offering COVID-19 hardship relief to help Aussies get through this rough period.
2. Ask for loan interest rate reductions
If you have a mortgage, you may want to consider asking for a rate reduction to lower your home loan repayments.
With rates at historic lows, it’s never been a better time to haggle for a lower rate.
3. Switch to lower-rate credit cards
If you’ve lost your job or your income has been reduced, and you have an outstanding balance on your credit card.
You may want to consider refinancing to a lower-rate card.
Some credit card interest rates run as high as 24 per cent.
There are a range of products with rates under 10 per cent.
Keep in mind that not every credit card will allow you to refinance to it.
You’ll need to ensure the new credit card’s terms and conditions allow for balance transfers.
4. Seek help where needed
If you need independent help, ASIC’s MoneySmart website has a range of support advice for those struggling with debt.
If you need immediate advice, consider reaching out to the National Debt Hotline: 1800 007 007.
Reference: Alex Ritchie Personal finance Writer at Rate City.
Recovering Early Release Super Young Women
Money taken out of super under the early release scheme doesn’t need to have a permanent impact on your retirement savings.
Young women have a better chance on they can rebuild their super account balance in the future.
If you’re under 40 years of age, our calculations show that you can recover a $10,000 early withdrawal.
By making after-tax contributions of around $10 to $15 a week until age 65.
If you are over 40, you could catch up by making weekly after-tax contributions of $15 to $20.
Reference:
There are plenty of ways to add to your super including making additional contributions or regularly salary sacrificing.
If you make voluntary after-tax contributions, you may be eligible to receive a co-contribution from the Australian Government.
Philippa Hunt is a Woman on a Mission.
WiseGirls Money Academy was created after working as a qualified Financial Adviser for many years and deciding it was time to assist women who desired to learn and develop the self-empowerment to understand their emotional relationship with money, the skills and knowledge to save and invest. They wanted to learn how to create their own financial future and become financially capable.
The WiseGirls Money Mission is to provide the opportunity and place for growth and development of women of all ages in personal and financial skills in a supported female environment so that they take control of their future to reach their own financial independence.
