Most of us don’t think much about our Superannuation, until we get closer to retirement. If you’re experiencing hardship and are considering applying for early access to your Super, this article will help you understand your options and what you need to do next.
As you’re probably already aware, Superannuation is specifically designed to help prepare you financially for retirement, so there are specific rules which govern how and when Super can be accessed. The Australian Government stipulates that unless you qualify for specific criteria which we will cover, Super cannot be accessed until you reach your preservation age.
Generally, once you’ve reached your preservation age and have fully retired from work, you should have no issue accessing your Superannuation. If you pass away before accessing your Super, it will be paid to your beneficiary. Nevertheless, if you find yourself in difficult circumstances, requiring you to access your Super early, there are a few ways you may be able to qualify.
Accessing Super Early: FAQs
Living expenses include overdue mortgage or housing payments, outstanding bills, car repairs and medical expenses.
While you are entitled to access your Super early to pay off debts, it’s important to understand that payments made under Severe Financial Hardship provision are only to be used to pay for living expenses (as outlined above), or to cover overdue bills or debt repayments. This does not cover any future repayments or debt clearance.
The preservation age is set by the Australian Government, as the age at which you’re eligible to access your Superannuation, once you’ve permanently retired. Preservation ages vary according to a person’s date of birth. For example, if you were born after 30 June 1964, your preservation age is 60. The preservation age of anyone born between 1 July 1960 and 30 June 1964 varies from 55-59. If you’re unsure of your preservation age, contact us anytime to discuss.
The main difference between applying to access your Super early on the grounds of Severe Financial Hardship and Compassionate Grounds is that those applying under Compassionate Grounds don’t need to have been receiving Government support payments to be eligible. To apply under Compassionate Grounds, you only need to prove your inability to make payment on one of the following:
- Your own or one of your dependant’s medical treatments
- Transport for a life-threatening, chronic pain inducing or mental illness
- Mortgage or council rates
- Your own or a dependant’s palliative care
- Death, funeral or burial expenses of a dependant
Your provider will make a tax-free Super lump sum payment to your account, if your Super complies with your provider’s terms.
- The payment will be tax-free under the following circumstances:
- You have a Terminal Medical Condition at the time of payment
- You have a Terminal Medical Condition within 90 days of receiving the payment
If the balance of your Super fund is less than $200 you may be able to access your Super early if your employment is terminated or if you’ve found a ‘lost Super’ account with a balance of less than $200.
Early Super payments are tax-free when the Super account balance is less than $200.