The advocacy group for industry super funds has insisted they stand ready to help members access their funds “as quickly and painlessly as possible” as the super sector braces for a 4,000 per cent increase in hardship redemptions as a result of the government’s early access scheme for those affected by COVID-19.
The news comes as Industry Super Australia releases a new ad campaign encouraging consumers to stay the course in their super fund rather than switching to cash, and outlining “the pros and cons of early super access”, according to an Industry Super statement.
A spokesperson for Industry Super told ifa that the aim of the new campaign was to remind fund members that while they may be tempted to change strategies as a result of the economic crisis, “for most when it comes to their super, the best course of action is no action”.
“Switching to cash or other defensive assets after a downturn can lock in losses and could mean members miss out on the market rebound,” the spokesperson said.
“Industry Super Australia ran a similar campaign during the global financial crisis – once again [we are] reminding members that super is a long-term investment and these short-term drops are usually smoothed out over the many years of superior returns.”
Amid speculation around the liquidity of industry super funds and their ability to fund member redemptions under the government’s early access scheme, Industry Super said funds were “putting in processes to ensure members in financial distress are able to access their super as quickly and painlessly as possible, without harming the long-term interests of all members”.
“Since the Early Access to Super scheme was announced, Industry Super Australia and other representative bodies have been in constant communication with government and regulators on how to process and prudently manage the impact of the 4,000 per cent increase in yearly hardship redemption applicants that Treasury estimates will access the scheme in a matter of months,” the spokesperson said.
“Funds are well-positioned to meet the demands of this scheme under all scenarios.”
According to ATO figures, more than 600,000 fund members have so far registered their interest in the government’s scheme, which opens on 20 April.
Industry Super also defended its funds' high allocations to unlisted assets such as ports and toll roads, which it said provided a buffer against financial market volatility and which were promoted in the new ad campaign as being important job creators for the Australian economy.
“These long-term assets provide a steady source of income over many years – sometimes decades – and act as an important buffer to members against the volatility of listed assets,” the spokesperson said.
“Industry Super Funds’ investments in these assets do not hamper their ability to meet the demands of the early access scheme.”
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