The Federal Government’s latest aid and stimulus package of $66 billion includes a big superannuation component worth a couple of billion of dollars and more.
Under the new plan, workers will have early access to $20,000 worth of their superannuation funds if they fall into hardship due to the virus.
But if super funds get knocked down in a rush and don’t have enough cash on hand or incoming cash flows, it could see more selling pressure for shares and bonds as funds raise cash to meet the increase.
The Federal Government is allowing people in financial stress as a result of the virus to access up to $10,000 of their superannuation in the 2019-20 financial year, and another $10,000 in the June 2021 year.
To be eligible, either your number of hours worked or your income will need to have fallen by 20%.
Applications online through the myGov website and if approved there’s no tax on the money released.
This one costs the budget estimated at $1.2 billion.
There was a $3.03 trillion in super at the end of December, according to the Australian Bureau of Statistics.
That’s likely to prove a high following the sell-off in sharemarkets here and offshore in recent weeks, along with weakness in currencies and some bonds.
As well there’s a temporary reduction of minimum super drawdown rates for retirees. The amount allowed to be withdrawn increases with age.
Canberra is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for this fiscal year and 2020-21. So a $40,000 drawdown becomes a $40,000, a $60,000 becomes a $30,000.
The government says this is designed to give retirees more flexibility in managing their superannuation assets.
And there’s a second cut to the deeming rate in 10 days.
The cut is a further 0.25 percentage points on top of the measures announced in its first round of stimulus.
This measure reflects the Reserve Bank’s rate reduction earlier this week.
The government estimates about 900,000 income support recipients, including pensioners, will benefit.
