About $38 billion was withdrawn from Australian super funds as emergency payments and about a million people cleaned out their entire retirement savings, according to an industry analysis.

The Association of Superannuation Funds of Australia said the early release scheme, which was designed by the government to allow access to retirement savings during the pandemic, was a success, but would have ramifications on those who used the access.

Australians were allowed to access super in two tranches for up to $10,000 each.

Data from the Australian Taxation Office indicated that about $39 billion was applied for through 4.78 million applications and of this amount 232,000 applications were rejected worth $1.4 billion.

ASFA said $38 billion in payments from funds at a time when financial markets were under stress.

“Around three million Australians applied for early release, many of them making two applications. Nearly one million Australians closed or largely cleaned out their superannuation account as a result of early release payments.

“The cleaning out of accounts was more prevalent for women, single parents and the unemployed.”

ASFA said there were indications that a number of Australians applied for early release, even though they were not entitled to it and that an unspecified proportion of early release payments went to “lifestyle items” and savings outside of superannuation rather than being spent on essential items.

ASFA said data from the ATO showed about 28 per cent was used to pay rent, 26 per cent went to bills, and 14 per cent went to pay down credit card or personal debt.

However, ASFA said the results from the ATO did not seem credible and it was likely there was significant under-reporting of the receipt of payments.

“As well, self-reporting of the main use of the funds would tend to generate more worthy destinations for the liberated amounts than was the actual case,” ASFA’s report said.

It also warned that if a 30-year-old withdrew $20,000 in 2020 under the scheme they would have $43,000 less in retirement at the age of 67.

The biggest reason for applying for the funds was because of reduced work hours.

ASFA deputy chief executive Glen McCrea said these people paid a high price for the access.

“While superannuation was able to do so much of the heavy lifting by distributing payments to people quickly in the early days of the pandemic, it’s important that we recognise the detrimental impact that this has had for the retirement savings of millions of Australians,” he said.

Despite the massive withdrawal, funds still retain about $3.4 trillion.

This article first appeared in our sister publication InQueensland. Read the original here.