What is driving people’s decision to withdraw their super now?

Full article issued by ARC Centre of Excellence in Population Ageing Research.

Research conducted by the ARC Centre of Excellence in Population Ageing Research (CEPAR) led by The University of New South Wales (UNSW) and in collaboration with Cbus, a leading industry superannuation fund, has identified that urgent short-term needs for funds are driving people’s decision to withdraw some or all of their superannuation savings under the COVID-19 Superannuation Early Release Scheme.

To understand the operation and effect of the COVID-19 Superannuation Early Release Scheme, a multi-organisational research team analysed survey results of over 3,000 members of Cbus, who withdrew some or all of their superannuation savings in the first phase of the COVID-19 Superannuation Early Release Scheme between April and June 2020.

The results show that the $10,000 limit both guided and constrained withdrawal amounts and that most respondents withdrew the upper limit. Around 25% of surveyed members withdrew almost their entire account balance, according to the study, which also revealed that many people who withdrew their super over the past months are uncertain about the long-term consequences of their decision.

Hazel Bateman, Professor of Economics at the UNSW School of Risk and Actuarial Studies, said that those who spent longer thinking about their decision and consulted more information sources before withdrawing their savings, held more realistic expectations of the impacts on retirement wealth, and were half as likely to decide to withdraw within one day or less than members who used no information sources. 

“This shows that more attention to information is related to an attempt to assess impact on retirement balances,” said Professor Bateman.

 

Image Credit: Pxhere.