We’re almost exactly two years into the coronavirus pandemic and Australians are still learning how to deal with the situation from a financial perspective.
One of the more contentious financial relief measures introduced in 2020 was the decision to allow individuals to access a maximum of $20,000 of their superannuation early.
Plenty of criticism was levelled at the government when it announced this initiative with speculation people taking advantage of it would use the money for lifestyle spending such as extensions for the family home and the purchase of big screen televisions.
Interestingly, the longer COVID-19 has lasted and the ‘safety measures’ implemented, such as lockdowns, the more disposable income people are finding themselves having as the opportunity to spend has been restricted.
According to some economists this is possibility a contributing factor to the rise in inflation rates around the world as individuals begin to pick up their spending patterns as coronavirus restrictions start to ease.
But for Australians having more cash at hand does not necessarily translate into increased retail spending as a recent report on voluntary contributions from AMP showed.
An analysis of contributions indicated the organisation’s superannuation members are 27 per cent more likely to make voluntary contributions to their retirement savings than they were before the pandemic.
In fact, AMP revealed its members contributed $296 more to their superannuation funds in the final quarter of 2021 than they did during the same period in 2019.
Furthermore, of the AMP members who had withdrawn some of their retirement savings early under the COVID relief measures 14 per cent said they are likely to contribute more to their retirement savings than before the pandemic.
Lastly, the specific attack on the government that early access to super would widen the super gender gap seems to have also been dispelled with the study finding contributions rates for women are growing six per cent faster than those for men.
I wrote at the time the early release of super was allowed that no one should ever lose sight of the fact it is the individual’s money and if allowed they are entitled to use it.
Not only that but I think more faith should be put into how seriously most Australians treat their retirement savings and how responsible they are with it.
Of course, we’ve heard all of the negativity before particularly when it comes to SMSFs. These have come in the persistent criticism that if you allow people to manage their own super they use the money to “invest” in assets like art or wine for their own personal enjoyment. Or that SMSF trustees will just withdraw their entire retirement savings when they reach a condition of release as a lump sum, blow it all and fall back on the age pension to fund their retirement. We all know none of these scenarios have come to fruition.
It’s a matter of trust that will dictate sensible superannuation policy and the AMP analysis is potentially another sign Australians can be trusted to manage their superannuation responsibly. But the $64 million question is whether Canberra and the other so called experts will recognise this.
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