Last week we wrote about the impact Covid-19 is having with regards to household debt levels, evidenced by the huge spike in the value of liabilities tracked in myprosperity. In this past week, there has been a great deal of debate in the media around early access to superannuation, so we decided to mine our data for useful insights.

In myprosperity, a client can have their SMSF, Retail or Industry Super Fund wired up securely to receive real-time data feeds including updated transactions and balances on a weekly basis. Since the pandemic commenced in March 2020, the number of new superannuation accounts added into myprosperity is up a massive 36% compared to the five months leading up to March. That is a substantial increase and is indicative of clients and their advisers paying closer attention to retirement portfolios. There are however no specific trends we can see in terms of total dollar value movement in superannuation as an asset class. To us that’s no surprise given that clients using myprosperity have access to a financial adviser and are typically more financially secure, and less likely to have to dip into superannuation to get through the pandemic. But it may not be as clear cut as that given the deep economic impact that Covid-19 is having across all socio-economic groups.

In speaking with a number of advisers over the past week who are using myprosperity, opinions seem divided on the government’s decision to enable early access to superannuation. While approval is granted on a case-by-case basis, we hear stories of young people accessing it to purchase a property or worse still, splurge on luxury goods. This poses a real problem because to top up superannuation to pre-Covid levels could take several more years of work; effectively, to pay off that impulse buy. Many however, are experiencing real hardships and are justified in their reasons for accessing superannuation early, such as paying off debt or meeting mortgage repayments.

Some have criticised Scott Morrison’s emphatic cries that the superannuation being accessed is “their money”. That may be true, but the Superannuation Guarantee scheme was introduced in the early 1990’s to ease the burden on Age Pension and share the load of retirement savings. Now with $29.4 billion withdrawn, we don’t know what it will equate to in terms of the number of individual workers who will now have to rely on the age pension in retirement.

The good news is that the advice industry is in the best position to assist clients during this difficult time and ensure clients make good financial decisions. And, if early access to superannuation is going to help a distressed client, a well considered approach must be taken. As the economy bounces back, which it invariably will, catch up payments on superannuation contributions via salary sacrifice can be made 2-3 years down the track to ensure retirement plans are not impacted. Just like we have seen with debt levels, JobKeeper and now superannuation, we think that there has never been a more important time for clients to have a financial adviser to help guide them through these very difficult times.