Presented at the IPRA Special Session on Pensions and COVID-19: The Global Experience
20K Now or 50K Later? What’s Driving People’s Decision to Withdraw their Super?
Speaker: Professor Ben R Newell (UNSW Psychology, CEPAR)
Abstract: The relaxation of conditions for early release of superannuation savings changed a fundamental feature of the Australian retirement savings system. Responses of members to the early release scheme highlight the effectiveness of the standard superannuation preservation rules. Early withdrawals have short-term and long-term consequences for individual members who take payments under the scheme, and for society as a whole. I will discuss results of a survey of over 3,000 members of Cbus, a leading industry fund, who withdrew some or all of their superannuation savings in the first phase of the COVID-19 early release scheme between April and June 2020. Major findings include: members’ uncertainty about the impact of their withdrawal on future retirement wealth; the anchoring effect of the $10,000 limit on withdrawal amounts; and the diverse motivations behind the decision to withdraw.
About the speaker: Ben Newell is Professor of Cognitive Psychology and Deputy Head of the School of Psychology at UNSW Sydney. His research focuses on the cognitive processes underlying judgment, choice and decision-making and the application of this knowledge to environmental, medical, financial and forensic contexts. Ben has worked with industry and government partners on projects including climate change communication, and retirement wealth-planning. A key theme of much of this work is over-coming the myopic thinking that tends to cloud our judgment when we are making decisions about an uncertain future. Ben is a member of the Academic Advisory Panel of the Behavioural Economics Team of the Australian Government.