Allowing early access to retirement savings: Lessons from Australia

Determinants of early-access to retirement savings: Lessons from the COVID-19 pandemic

“… 10 Although there are differences of opinion regarding the usefulness of ex-post self-reports of decision-processes (e.g., Newell and Shanks, 2014 ; Nisbett and Wilson, 1977 ; Szollosi and Newell, 2020 ), we find that responses are corroborated by other data sources and analyses of the impacts and use of early-release payments (see e.g., ABS, 2020; Wang-Ly and Newell, 2022 ). …”

“…Thus, fast decisions that did not take longer-term future consequences into account could have been sensible for some individuals. However, the data also indicate increases in discretionary spending (shopping, entertainment, online gambling), indicating that at least some participants may have withdrawn opportunistically rather than out of need ( Wang-Ly and Newell, 2022 ). This latter finding echoes patterns seen internationally that show considerable heterogeneity in consumption responses by recipients’ financial status and demographic characteristics ( Kubota et al, 2021 ).…”

“…Second, we add to the growing literature on the apparent difficulty people have estimating the impact of lifetime saving and spending decisions ( McKenzie and Liersch, 2011 ). Finally, while several studies have examined how people have used COVID-19 stimulus payments and previously illiquid retirement savings ( Bishop et al, 2022 , Kubota et al, 2021 and references therein; Wang-Ly & Newell, 2022 ) and the impact of (lack of) trust in pension funds (Lopez and Rosas, 2022), we examine the decision-making process and behavioral influences that precede the decision to withdraw money.…”

Early Pension Withdrawals in Chile During the Pandemic

“…During the pandemic, several other nations also permitted Covid-driven pension fund withdrawals (e.g., Guerrero 2021;Marusic 2021;Dominguez and Pierola 2021), yet we are aware of only three academic studies that have sought to evaluate the factors driving early withdrawals on pension participants during the pandemic: two on Australia (Bateman et al 2020;Wang-Ly and Newell 2022), and two on Chile, by Lorca (2021) and Maderia (2022). The Australian analyses found that the majority of those permitted to take up to AU$10,000 as a maximum payout withdrew the entire amount permitted.…”

Household Saving in Crisis – Literature Review

“…They received financial support, but it was lower than the reduction of their income. Consequently, government support was necessary (Bhutta et al, 2020;Wang-Ly and Newell, 2022;Achou et al, 2020). But in the case of the pandemic, government funds were used to support the income and consumption of households as opposed to the financial crisis when help was provided to financial system entities.…”