However, industry experts warn the move could prove catastrophic to the future retirement of sole traders.
Peter Stanhope founder of Gig Super said while having access to funds right now was crucial, the self-employed would bear the brunt of the impact for years to come.
“Having funds right now is crucial and we support any initiative that gives people the money they need to get through this crisis. However, self-employed people already have a superannuation problem that has gone largely ignored,” Stanhope said.
“Namely, 20% of self-employed people have no super at all and we estimate that 70% don’t make regular contributions. In turn, this means that self-employed people are already retiring with 50% less super than their employee counterparts.”
Stanhope said withdrawing super balances could make for a retirement failure.
The ISA CEO agreed with this sentiment, saying access to super should be a last resort.
ISA analysis showed a 20-year-old who accesses the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance. A 30-year-old who accesses $20,000 from super now could lose about $100,000 when they hit retirement and a 40-year-old could lose more than $63,000.
The association suggests accessing superannuation early should be approached with extreme caution and only as a last resort.
“Members need to know that taking your super now is like selling a house at the bottom of the market- you’ll lose money you would probably claw back over time,” says Dean.
While Stanhope says for the self-employed the situation is worsened. He says giving this group of people access to their retirement funds without a plan could mean setting them up for disaster down the track.
Stanhope is calling urgently for the government to put in place a super recovery package to assist people on the other side of the crisis.
“There need to be measures in place for a superannuation recovery package for self-employed people who have no other option right now than to access what little superannuation savings they have.
We’re appealing to the Government to look at tax incentives and contribution matches to assist self-employed people in recovering their retirement nest-egg as soon as possible. Failure to do so could mean sending this cohort of people, who are already going to struggle, into an absolute retirement catastrophe.”