Already one million Australians have applied to pull up to A$20,000 each from their retirement savings, industry data showed, while thousands of eligible workers have depleted their savings completely.

The long-term consequences could be devastating for many people, an industry group said. About A$42 billion (23.17 billion pounds) is expected to be withdrawn under the government scheme giving early access to retirement savings to support a coronavirus-hit economy, according to treasury analysis.

That is 56% more than the government’s first estimate of A$27 billion. “Allowing Australians to access their own money during this difficult period has proved extremely popular,” Treasurer Josh Frydenberg said in an emailed statement.

Treasury analysis of banking data showed the vast majority of early release payments are being used in mortgage offset accounts that reduce interest payments, and over half remains unspent. “We know that almost 60% of those accessing their super early have used it or plan to use it to meet essential day-to-day expenses, including paying down debts, with another 36% adding the money to their savings,” Frydenberg added, referring to superannuation, or workers’ mandatory retirement savings.

Industry sources and academics, however, have warned of the likely opportunity cost of withdrawing the money early, missing out on future compounding returns that will hit future retirement balances.

“This scheme is delivering many members support to get through some tough times,” said Bernie Dean, chief executive of the industry group Industry Super Australia. “(But) to have over half a million people using it to drain their savings completely is devastating – and most of them still pretty early in their working life.”

The policy-driven raid on retirement savings has also impacted the domestic stock market as pension funds sell assets to pay those customers.

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