More than 360,000 Australians have applied to get an early release of their superannuation under the Federal Government's plan designed to help jobless Australians and those facing financial hardship because of the coronavirus crisis.

The Morrison Government is allowing retrenched workers and those suffering financial hardship as a result of COVID-19 to, from April 20, access up to $20,000 in super, and take it out tax free.

The first $10,000 is available between mid-April and July 1, and the second $10,000 is available after July 1 for about three months.

The Australian Taxation Office (ATO) said at the end of April 2, it had 361,000 registrations of interest, but could not yet estimate how many people would be eligible to draw down.

To be eligible, people must have had their working hours reduced by 20 per cent or more or be sole traders whose turnover has fallen by at least 20 per cent.

The Federal Government has forecast a total of about $27 billion will be drawn down by about 1.5 million people under the scheme.

Treasurer Josh Frydenberg has said the provision, announced as part of the Government's second-round stimulus package, would amount to less than 1 per cent of the almost $3 trillion currently saved in superannuation.

Rice Warner has estimated about $40 to $50 billion will be withdrawn, and it believes Australians in hard-hit sectors like tourism, retail and hospitality will be the ones most commonly applying to access their super.

Treasurer Josh Frydenberg and Prime Minister Scott Morrison announced people struggling due to the pandemic could access $20,000 from their superannuation. ( ABC News: Nick Haggarty )

Smaller funds may struggle to survive, Rice Warner warns

Rice Warner has also warned investments in critical infrastructure could be slashed and some smaller funds may struggle to survive.

"While most funds will have strong cash flows and cash balances, the withdrawals will reduce cash for reinvestment in assets with depressed market prices," Rice Warner said.

"For the 25 per cent of funds which will lose up to 10 per cent of their members, a reassessment of cash flow, liquidity and asset allocation will be critical."

Ian Silk, chief executive of the nation's biggest superannuation fund, Australian Super, also last week said the Government may have underestimated the number of people who would access their super during the coronavirus crisis.

He said that for someone aged in their 20s, superannuation was a 60-year-plus investment. He urged them: "Don't act precipitously. Unless you have a particular reason, just hold your stations."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 5 minutes 53 seconds 5 m Ian Silk speaks to The Business ( Rachel Pupazzoni )

Withdrawing super early may also affect a person's income protection insurance and life and total permanent disability insurance cover if they fully withdraw or have a balance below $6,000.

Industry Super Australia chief executive Bernie Dean said Australians could wipe big sums off their retirement savings by withdrawing too early.

"Most people get that cracking open your super now comes with a steep price. For many it could be as much as six figures from your retirement balance," Mr Dean said.

He said time would tell if the Government's estimates were accurate, but industry funds were "prepared for any scenario and will be looking after those that need to access their savings, and those that don't".

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Assistant Minister for Superannuation Jane Hume told the AFR Banking and Wealth Summit last week a person would need to certify that they met the eligibility criteria before withdrawing.

Ms Hume said funds whose members worked in sectors hardest hit by coronavirus, especially smaller funds, may face "discomfort", but that was "no excuse to not release members' money — their own money — in a time of need".

"Any fund who refuses a member access to their money after an ATO determination is essentially admitting that their investment governance was cavalier or their systems inadequate," she said.

Assistant Minister for Superannuation Jane Hume said there was "no excuse" for funds not not release members' money. ( ABC News )

Tax arbitrage opportunities arise

Grattan Institute program director Brendan Coates said fast-tracking access to superannuation in cases of financial hardship — together with the Government's JobKeeper wage subsidy of $39,000 a year and its doubling of the Newstart rate to about $29,000 a year — was critical to making sure many Australians survived financially in the coming weeks.

He said many Australians would still struggle, with half of working households (those with at least one employed person) having less than $7,000 in the bank, and about 20 per cent having less than $500.

But diverting superannuation money from retirement into Australians' wallets today is not without cost.

"There is a clear tax arbitrage opportunity via the new early release scheme for super," he said.

"Normally super funds withdrawn before age 60 are taxed, but funds withdrawn via the new early access regime are tax free."

"Those that withdraw the full $20,000 via the early release scheme, and voluntarily contribute the same amount, could save up to $5,000 in personal income tax. "

But a lot will depend on how stringently the ATO assesses Australians' self-declarations of financial hardship when they apply for early release of super.