This document was added 21/05/2020.
Early release of superannuation provisions within the Australian System of National Accounts
Referring to international manuals and guidance, the Australian Bureau of Statistics (ABS), has determined that early release of superannuation provisions will be classified as an exchange of financial assets within the Australian System of National Accounts. The exchange comprises a reduction in pension entitlements offset by an increase in cash and deposits. This note describes early release of superannuation provisions and where recent changes in these provisions can be seen within the Australian System of National Accounts.
Early release of superannuation provisions
Early release of superannuation provisions permit an eligible individual to make withdrawals from their superannuation account prior to retirement. Prior to COVID-19, these provisions comprised the First Home Super Saver scheme (footnote 1), severe financial hardship / specific medical conditions (footnote 2), and the Departing Australia Superannuation Payment (footnote 3).
From mid-April 2020, the Australian Government expanded early release of superannuation provisions in response to COVID-19. The expanded early release of superannuation provisions allow eligible individuals in financial stress as a result of COVID-19 to withdraw up to $10,000 of their pension entitlement in 2019-20, and a further $10,000 in 2020-21. By 11 May 2020, APRA regulated funds had paid $6.3 billion to members (footnote 4).
Superannuation within the Australian System of National Accounts
Superannuation is a pension entitlement within 2008 SNA. Pension entitlements within the 2008 SNA comprise ”the extent of financial claims both existing and future pensioners hold against either their employer or a fund designated by the employer to pay pensions earned as part of a compensation agreement between the employer and employee” (2008 SNA, para.11.107). Pension entitlements are a financial liability of financial corporations and a financial asset of households and rest of the world.
The Australian System of National Accounts include the following four transactions to describe superannuation:
a. Employers’ actual pension contributions: These include payments made under the Superannuation Guarantee (Administration) Act (1992) and form part of compensation of employees (income account).
b. Costs of operating the pension fund: These comprise payments to the superannuation provider. It is output of the finance and insurance industry (production account) and consumption expenditure of both households and rest of the world (income account).
c. Property income on pension entitlements: These comprise investment income on existing pension entitlements as shown in the household income (income account).
d. Net transactions in pension entitlements: The net impact of the above three items plus contributions made by households (e.g. non-concessional contributions), less pension benefits (footnote 5) and early withdrawal of superannuation are shown within the financial account.
Relevant series involving pension entitlements include those published in Australian National Accounts: Finance and Wealth (cat. no. 5232.0) as shown in the below table. Households added $19,279m to their pension entitlements during the December Quarter 2019 to increase the value of their pension entitlements to $2,663,951m. Non-residents added $132m to their pension entitlements during the December Quarter 2019 to increase the value of their pension entitlements to $2,716m.
|Quarter Ending|Net transactions in pension entitlements (footnote 6) ($ million)
Pension entitlements at end of quarter ($ million)
Rest of world
Rest of world
2 285 203
2 361 836
2 417 159
2 304 169
2 442 115
2 544 378
2 612 265
2 663 951
Early release of superannuation provisions will be recorded as a reduction in net transactions in pension entitlements in these series.
The impact of the expanded early release of superannuation provisions in response to COVID-19 is most likely to be seen during the June Quarter and September Quarter 2020 (footnote 7
5 Pension benefits are payable at the moment of retirement (2008 SNA para 17.138). Early release of superannuation provisions are therefore not pension benefits. The distinction between pension benefits and early release of superannuation is irrelevant in the Australian System of National Accounts. <back
6 The difference between the change in pension entitlements and net transactions in pension entitlements is due to revaluations and other changes in volume. <back
7 Existing early release of superannuation provisions (e.g. the Departing Australia Superannuation Payment) are more likely to remain relevant for the rest of the world. <back