Research released by Colonial First State showed that a majority of Australians who withdrew their super through the early release scheme are yet to rebuild their balances.
Under the government’s temporary early access to super scheme, individuals and sole traders who had suffered financial hardship of at least 20 percent due to loss of work or hours were enabled access to up to $10,000 from their superannuation retirement savings in the 2019-20 financial year.
A second round of the scheme, from 1 July to 31 December, permitted people to apply to withdraw a further $10,000.
Colonial First State general manager Kelly Power said that while she supported the government granting access to superannuation, it is important that members replenish their funds.
“The early release scheme has been a vitally important initiative to help Australians deal with the pandemic and cover basic expenses, including those living overseas or unable to get back to Australia,” Ms Power said.
“For younger members in particular, now is the time to start making up some lost ground by using these contributions to rebuild their savings for the years ahead.”
Ms Power advised those who accessed the scheme that making small and regular contributions will have a long-term impact on retirement balances.
“If you withdrew $10,000 from your super, think about replenishing it outside of the super guarantee,” Ms Power said.
“Making additional contributions of just $20 a fortnight from your pre-tax income (salary sacrifice) can mean an additional $25,000 at retirement. Because it is pre-tax, this would only equate to a reduction of $13 from their after-tax income per fortnight.”
“Spousal, after-tax and concessional contributions may deliver tax breaks or qualify you for government contributions and can help to grow yours and/or your partner’s nest egg,” she explained.
Finally, the general manager advised members looking to set an online reminder to check in with their superannuation balance.
“Similar to scheduling diary reminders for your work or social engagements, and for other bill payments such as credit card, rent or utilities, set yourself diary reminders to check in your super every month.
“Think of it as a ‘reality check’ of where you’re headed in your journey to a comfortable retirement,” Ms Power concluded.