Hot on the heels of the announcement that QSuper will no longer offer their members comprehensive advice, a new report from Industry Super Australia has found nearly half a million Australians have emptied their super accounts following the governments early access to super scheme. In more promising news, today major banks announced they may extend mortgage payment deferrals to those still struggling financially from the economic effects of the pandemic.
Q Super Exits Comprehensive Advice
Last Friday QSuper announced it will stop offering comprehensive advice to it’s members. The change will affect all new members from Monday July 6th. It is expected that over 50 people from the paraplanning and support roles will lose their jobs as the fund seeks to move forward with their intra-fund advice strategy.
In a statement, QSuper chief executive Michael Pennisi said that the fund will continue to service existing comprehensive advice clients under the current service, but in the last three years, less than 1% of the fund's 585,000 members accessed comprehensive advice via the superannuation fund. QSuper plans to continue with its intra-fund advice strategy which limits advice to members' superannuation and not their broader financial affairs. There is no additional cost for this type of advice as it is cross subsidised by the collective membership.
A QSuper spokesperson said “The majority of our members who use comprehensive advice get that advice from their preferred external adviser…We currently work with these external financial advisers to help them understand their clients’ QSuper account details and benefits.”
Thousands Left With Zero Super
Nearly half a million Australians have taken out all of their superannuation under the governments early access to super scheme according to research from Industry Super Australia. According to the research, around 480,000 Australians had emptied their accounts, with 395,000 of them being under the age of 35.
The report said a 25-year-old taking out $10,000 now could have $49,000 less in retirement, while a 35-year-old could lose up to $34,000 and a 45-year-old up to $23,000. Industry Super chief executive Bernie Dean lamented the extraction from the super system saying “to have hundreds of thousands wiping their savings out midway through their life is a tragedy waiting to happen and it will affect everyone. Every Australian deserves a good life in retirement, not just scraping by on the pension.”
Banks May Offer Further Mortgage Repayment Holiday
Australian Banking Association (ABA) chief executive Anna Bligh said "Today banks are announcing the next stage of this support, which will be specifically targeted to getting people back on repayments while continuing to help those hardest hit.” She noted that more than 800,000 people had deferred repayments during the coronavirus pandemic. It has been estimated that loans totalling $260 billion have deferred their repayments since March.
The extended measures would not automatically apply to all those who received the initial relief, but instead would only be offered to those unable to resume payments as a result of continued hardship due to the covid-19 pandemic.
According to the ABC, the ABA said longer deferrals were not in the interests of people who could start paying their loans back and people who were still experiencing financial difficulty would be contacted towards the end of the six-month period to work out whether they could restructure or vary their loan.
There have been numerous concerns raised about the impending “economic cliff” looming in September, when the initial bank loan deferrals were slated to end. The timing meant that it would coincide with the expected withdrawal of government support measures, including the JobKeeper wage subsidy and the JobSeeker coronavirus supplement.
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