HONG KONG/SYDNEY, March 23 (Reuters) - Australia’s A$3 trillion ($1.72 trillion) pension industry was not consulted on the federal government’s decision to allow the unemployed and sole traders early access to retirement savings and is now in urgent talks about the move, sources said.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg on Sunday revealed a A$66 billion fiscal stimulus package including measures allowing workers to take up to A$20,000 out of their superannuation savings over the next two years in response to the impact of the coronavirus crisis.
“We are disappointed that ... the government is not taking seriously enough obvious problems with the scheme’s design, such as the manual nature of the work required and the estimated volumes expected,” Industry Super Australia chief executive Bernie Dean told Reuters on Monday.
Talks between industry representatives, the government and the country’s top regulators on how the changes will affect the industry during a time of financial market upheaval only began on Monday, two sources with direct knowledge of the matter said.
Dean confirmed there was no consultation ahead of Sunday’s announcement between the government and the superannuation industry in Australia, which holds the world’s third-largest pool of pension assets, worth about $3 trillion at the end of the December quarter, as a result of laws requiring employers to contribute at least 9% of a worker’s salary to a pension.
Workers have previously only had limited options to dip into their savings and could apply through the Australian Tax Office for issues like terminal illness or severe financial hardship.
“They need to take advice about how to make the scheme work efficiently and effectively for people that may need the money,” Dean said of Canberra’s plan.
Officials from the Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) met with the Association of Superannuation Funds of Australia (ASFA) on Monday to discuss how the increased access would be implemented, ahead of a second round of negotiations that will include Treasury, due for Wednesday, one source said.
The source could not be identified because they were not authorised to speak to the media about the discussions.
The early access will also apply to workers who have lost more than 20% of their income and the government has estimated the changes could inject up to A$27 billion worth of cash into the economy, according to Frydenberg’s announcement.
ASFA deputy chief executive Glen McCrea said a high number of workers were already trying to access their superannuation, even though funds will not be available until after mid-April.
A spokesman for Frydenberg did not respond for comment. ($1 = 1.7406 Australian dollars) (Reporting by Scott Murdoch and Paulina Duran; editing by Jennifer Hughes and Alexander Smith)