Early Access to Super – When is It Possible?
Superannuation is designed to provide you with an income when you retire, but what if your circumstances suddenly change prior to retirement? In such cases it may be possible to access your super early, provided you meet one of the following eligibility requirements:
- Experiencing severe financial hardship
- Have a terminal illness – two medical practitioners will need to certify that you have less than 24 months to live, one of whom must be a specialist in the area related to your illness/injury.
- Temporary or Permanent Incapacity – if you are unable to work your usual hours, or if you are unable to work at all.
- Temporary Australian Resident (visa expired and leaving Australia) – you may be able to claim a departing Australia superannuation payment (DASP). See this page for further information.
- Less than $200 balance in your super fund – you may access your super if your employment is terminated and your super balance is less than $200, or if you have found a ‘lost super’ account containing less than $200.
- Compassionate Grounds
- First Home Buyers – If you are a first home buyer, you may be eligible to access up to $30,000 of voluntary super contributions. For more information, please see the following page on the ATO website.
If you are over 55, you can also commence a transition to retirement which will enable you to draw some of your super whilst continuing to work with reduced hours.
The most common reasons for accessing super early include financial hardship and compassionate grounds, and the details will be discussed in the following paragraphs.
The classification of financial hardship
If you are experiencing severe financial hardship, you will need to apply to your superannuation fund for early release of super funds.
You must meet BOTH conditions below in order to withdraw:
- You have received eligible government income support payments on a continuous basis for 26 weeks or more
- You are no longer able to meet reasonable and immediate family living expenses
You can withdraw a minimum of $1,000 and a maximum of $10,000. Bear in mind that any amount withdrawn will be taxed as a super lump sum (unless you are over 60, in which case you will not be taxed), and only one withdrawal is permitted per 12-month period.
Withdrawing super early on compassionate grounds
Compassionate grounds for early withdrawal of super are broad, and you will firstly need to obtain approval from the ATO. The ATO superannuation enquiries line can be reached by phone on 13 10 20.
Valid reasons for early withdrawal of super under compassionate grounds include:
- Medical Treatment and Medical Transport, either for yourself or your dependants
- Inability to meet mortgage repayments or pay council rates, placing you at risk of losing your home
- Expenses relating to the modification of a residence or vehicle in order to accommodate a severe disability (either your own or a dependants)
- Palliative care expenses for you or your dependants
- Payment of expenses relating to the death, funeral or burial of a dependant
For further information, please see the Early access on compassionate grounds page on the ATO website.
Always consider your circumstances
In some cases it may be necessary to access your super in order to alleviate a financial burden, but it is important not to rush your decision. Early withdrawal of super may result in:
- A reduced retirement income
- The loss of an asset protected against creditors in the event of bankruptcy
- Money released prior to retirement may be taxed at a higher rate
- The potential loss of insurance benefits (e.g. income protection, TPD insurance)
- Your super fund charging service fees for early release
- A reduction in your Centrelink payment
Here at Pillar Financial we are passionate about helping our clients make smart decisions which will ensure their future prosperity. We would strongly advise scheduling a consultation with a member of our team prior to commencing early withdrawal proceedings, as this will allow you to make a confident and professionally informed decision.
Protect your future – schedule a consultation at Pillar Financial today
Life can change in a moment, but it’s important not to lose sight of the future. The team at Pillar Financial have a wealth of experience in asset management and financial planning, and we would welcome the opportunity to assist you during your time of need.
To schedule a consultation with a financial advisor, please contact Pillar Financial today on 1300 730 309, or submit an enquiry via our website.