One Nation’s bid to turn super into an ATM won’t just fuel inflation and make Australians poorer – it could also leave taxpayers on the hook to pay up to double the amount taken out.
New modelling of the policy by the Super Members Council shows taxpayers would have to fund an extra $14,000 in lifetime Age Pension payments for every median full-time worker aged 25 who withdrew 3% of super contributions for 3 years.
That bill is almost double the amount One Nation says people would withdraw over three years.
Currently, Australia is on track to have the lowest pension spending in the OECD. As spending on the Age Pension falls from 2.3% of GDP today to just 1.8% by 2066,
But that trend could be reversed if the policy became law.
“One Nation’s policy will not only make Australians poorer and fuel inflation, quickly wiping out the value of any super you withdraw. Now we can see it will also leave taxpayers on the hook for up to double the amount of super that’s taken out,” said the Council’s CEO Misha Schubert.
“And that higher bill to taxpayers in Age Pension costs will make it harder to fund the services struggling Australians rely on - hospitals, medicines, schools, roads, and drought and flood relief.”
“With other nations threatening to be sunk by rising pension costs due to ageing populations, it makes no sense for Australia to follow them down that costly path.”
The Super Members Council modelling released earlier this week found a median full-time worker withdrawing 3% of contributions for 3 years would be $25,000 poorer by retirement.
For a couple it would be around $50,000 worse off.
If it became permanent, the policy would wind back the Super Guarantee to 2013 when it was 9% – slashing people's super by up to $132,000 for an average worker by retirement.
The policy would also mean more of people’s super would need to be shifted into short-term liquid investment options that generate lower returns, further weakening people’s super.
The Early Release of Super scheme in COVID showed the cost of early release on people’s super when the safeguards on it being invested until retirement were briefly suspended.
Almost $38 billion was withdrawn, mostly by younger Australians, and RBA reviewed research showed a spike in cash withdrawals and spending on gambling, alcohol, furniture and takeaway food.
“This latest plan to turn super into an ATM would be even more disastrous than the COVID early release scheme in wiping out large chunks of people’s pay cheques in retirement,” Ms Schubert said.
The costs
|
Scenario |
Example |
Cash taken |
Extra age pension cost to taxpayers |
For each dollar of super taken now taxpayers must fund an extra… |
|
3-year opt-out |
Median full-time worker, $90,500 |
$6,923 |
$14,000 |
$2.02 pension |
|
Individual, $120,000 |
$9,180 |
$13,000 |
$1.42 pension |
|
|
Family, $168,000 combined |
$12,852 |
$22,000 |
$1.71 pension |
|
|
Family, $240,000 combined |
$18,360 |
$19,000 |
$1.03 pension |
Source: SMC Cameo Model. Note all dollars are deflated to 2026 by 3.7% p.a wages growth consistent with the 2023 Intergenerational Report (IGR). High income households are less affected by the age pension means test which give rise to extra pension costs. Cameo of a 25 year old today.
ENDS
About us:
The opinions above are those of the author in their capacity as spokesperson for Super Members Council of Australia (SMC). SMC, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations.
Contact details:
Mike Dolan, 0474 909 471, [email protected]