Link to Covid-19 Early Release Data Analysis - Dashboards

Note: Blog Post Updated with APRA Data Released - November 30, 2020

The Australian Government announced at the start of the Covid-19 pandemic and opportunity for Australians disadvantaged by Covid, to access their superannuation. The opportunity was in two tranches, up to $10,000 before June 30, 2020 and another $10,000 post June 30.

The scheme has been met with mixed reactions, some being positive for the initiative and others indicating that the long term cost for individuals and the country will be a massive burden.

Rather than dwell on wether accessing super early is right or wrong, our analysis has taken a different approach. We have looked more closely of the withdrawals across super fund types, that include Industry and Retail Funds, and by individual funds. The dashboards created allow you, as the user, to review the data and form your own opinions.

Working through the data, we are probably left with more questions than answers. Below are some key points to come from the analysis along with questions which could be answered subject to additional data being provided by APRA and the funds.

Key takeaways from the analysis:

• Industry Funds have taken the brunt of the withdrawals - 65.07% of all applications paid and 65.11% of all payments made are from Industry Funds. For Retail Funds it is 25.87% of all applications paid and 25.83% of payments made. Dashboard 2.

• Industry Fund membership base is 44.46% of all superfund members (using available data and does not include SMSFs) yet make up 65.02% of all (initial and repeat) applications. Retail Funds represent 34.27% of superfund members and make up 25.87% of all applications. Dashboard 4.

• Industry Funds make up 41.16% of total Member Benefits (net assets available to members), and have paid out 64.67% of all payments. Retail Funds represent 37.47% of Member Benefits and 26.61% of all payments. Dashboard 4.

• Initial Applications as a percentage of fund membership is at 19.24% of all Industry Fund members. For Retail only 9.93% and the Public Sector at 7.43%. Dashboard 3.

• When Repeat Applications are included, (Repeat application is when a member makes a second application against the same fund), the number of all applications as a percentage of members grows to 27.09% for Industry Funds. This does not mean that 27.09% have applied to withdraw funds, it does however provide a comparative figure versus other fund types. Retail is at 13.98% and Public Sector Funds at 10.75%. Dashboard 3.

• For total payments made as a percentage of the total membership benefits (in effect the net assets of the fund), Industry Funds have paid out 3.38%, more than double Retail Funds at 1.53% and Public sector funds at only 0.83%. Dashboard 3.

• The average payment made across all funds are quite similar. With an average of $7,593 for Industry Funds; Retail Funds at $7,875 and for Public Sector $8,328. The total average was $7,650.

• The ‘average of averages’ (as opposed to a simple average above) is a little higher at $8,266 for the total. Dashboard 5.

• What is alarming is the average payment as a percentage of the average balance held in the funds. For Industry Funds, the average payment is $8,033 while the average balance in the fund is only $77,794. This means that 10.33% of the average balance is being withdrawn. For Retail Funds it is 5.75%. Dashboard 5.

• At the individual fund level, the top 20 funds make up for 86.36% of all payments made and 86.86% of all applications paid. Leading the way was AustralianSuper representing 14.51% of all payments made, followed by SunSuper at 10.89%, REST at 10.29%. HostPlus in fourth at 9.62%. Dashboard 6.

• The top six positions for applications and payments made are all held by Industry funds. Dashboard 6.

Some questions worth asking:

• How many individuals have applied for a payment? Individuals can be members of several funds. The data only shows the number of applications by members not by individuals. For example, ‘John Citizen’ is a member of three super funds. He applies to all three funds under this scheme, the data will show three applications for three members. The data by individuals should be available via ATO using Tax File Number to track the data

• Update on Individuals that have withdrawn funds - There will be more information released on this aspect along with other stats later in the year. During question time in the senate Friday August 14th, In total 2.72 million people have accessed their super. Broken down as 2 million applied twice, 500,000 applied once and a further 270,000 have applied post June 30 (to Aug 14)

• How many accounts have been closed? This could be massive with a large impact across the sector. For example, there has been a total of 3,167,210 Initial Applications for withdrawal. If 50% of the applicants were to run their balances to zero and close the accounts, this would see nearly 1.6 million fewer accounts. Assuming an average admin fee of $100 p.a. this equates to a loss of $160 million of fees. Additional fees will also be lost to fees charged for funds under management and lucrative fees for life and disability insurance

• Have Financial Advisers influenced members? While it is no surprise that some Industry Funds have been hard hit due to their industry they serve, the difference between members applying for their funds is still significantly different between Industry Funds and Retail Funds. We know that Financial Advisers have aligned themselves more-so with Retail Funds and it may well be that Retail Fund members have discussed options with their Adviser or seen communications from their Adviser about the scheme, leading to the lower rate of applications to redeem funds for Retail Funds

• Why do we have so many super fund members (accounts) in the first place? The data is suggesting (complete data is not shown by APRA for privacy), that we have some 26 million member accounts (listed by APRA) and there is an additional 1.13 million SMSF Members (listed by ATO), a total of 27.13 million accounts. Population of Australia approx. 25.5 million. Working age population (ABS) is approx. 65% or 16.6 million. Another 1.9 million are self or part funded retirees. This suggests in total we need around 18.5 million super accounts (16.6 +1.9 million). This indicates we have an excess of approx. 8.63 million super accounts generating $863 million dollars in yearly admin fees/costs at $100 per account.

If you have any questions, or would like additional information, please contact me, Colin Williams directly - details listed below.