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Allowing early access to retirement savings: Lessons from Australia

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  • Wang-Ly, Nathan
  • Newell, Ben R.

Abstract

In response to the COVID-19 pandemic, many governments around the world introduced policies aiming to provide citizens with financial relief through early access to their retirement savings. In Australia, the Early Release of Super (ERS) scheme allowed eligible citizens to withdraw up to A$20,000 in funds between April and December 2020. Using data provided by a large Australian bank, we examine the characteristics of the individuals who withdrew, how they used the withdrawn funds, and what impact this had on their financial wellbeing. We find that the scheme achieved its intended goal of providing immediate financial support to citizens in need. The scheme was primarily accessed by individuals in poorer financial circumstances, and helped withdrawers to pay down high-interest debts and avoid arrears. Based on our findings, we consider the implications for governments looking to implement similar policies in the future, as well as the opportunities to support individuals who have now withdrawn from their retirement savings.

Suggested Citation

  • Wang-Ly, Nathan & Newell, Ben R., 2022. "Allowing early access to retirement savings: Lessons from Australia," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 716-733.
    • Handle: RePEc:eee:ecanpo:v:75:y:2022:i:c:p:716-733
    DOI: 10.1016/j.eap.2022.07.002
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    Cited by:

    1. Wang-Ly, Nathan & Newell, Ben R., 2024. "Income volatility and saving decisions: Experimental evidence," Journal of Behavioral and Experimental Finance, Elsevier, vol. 43(C).
    2. Carlos Madeira, 2024. "The effect of Covid pension withdrawals and the Universal Guaranteed Pension on the income of future retirees in Chile," BIS Working Papers 1176, Bank for International Settlements.
    3. Bateman, Hazel & Dobrescu, Loretti I. & Liu, Junhao & Newell, Ben R. & Thorp, Susan, 2023. "Determinants of early-access to retirement savings: Lessons from the COVID-19 pandemic," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    4. Lhaopadchan, Suntharee & Gerrans, Paul & Treepongkaruna, Sirimon, 2024. "Retirement savings behaviours and COVID-19: Evidence from Thailand," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    5. Madeira, Carlos, 2024. "The effect of the Covid pension withdrawals and the Universal Guaranteed Pension on the income of the future retirees and its fiscal costs," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).

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