Ask an Adviser - Accessing your Superannuation Early

Top answer provided by:

Peter Morrison-Dowd

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Accessing Super prior to preservation age (55+) is a difficult option and requires a level of support by the Trustee of your superfund and unless you are suffering from financial hardship is very limited when it can be obtained.  

Financial Hardship definition is deed as;

• Received Commonwealth income support for 26 weeks, and cannot meet reasonable and immediate family expenses. Schedule 1 of the SIS regulations 1994, stipulates that you can access up to $10,000 of your super benefit in each 12-month period, and a minimum of $1,000. The 12-month period starts from the first payment.
• Reached preservation age (age 55 for those born before July 1960, and at least age 56 for those born on or after 1 July 1960) and received Commonwealth income support payments for 39 weeks (cumulative) after the person reached preservation age. Can access full super benefit if required.

You must apply to your super fund to claim early access to your super benefits on the basis of severe financial hardship. Note that even if you satisfy the conditions for early access to super benefits due to ‘severe financial hardship’ you may belong to a super fund that doesn’t permit access on these grounds. As a preliminary step, check with your super fund as to whether they permit benefit withdrawals for financial hardship.

You can apply for the early release of superannuation on one or more of these specified compassionate grounds if you need to:

• pay for medical or dental treatment, for yourself or a dependant or pay for transport to the treatment
• prevent your home from being sold by the lender that holds the mortgage
• modify your home or vehicle to accommodate your own needs, or the needs of a dependant, for a severe disability
• pay for palliative care for yourself or a dependant with a terminal medical condition
• pay for expenses associated with a dependant’s death, funeral or burial

You have to consider that early release of superannuation may impact benefits you or your partner receive including, but not limited to, Family Tax Benefit, Child Care Benefit or an income support payment. Also, the superannuation fund trustee may charge you fees for the early release of your superannuation. Any early release of superannuation may also be taxed.

So what do you do if you find yourself in this position?

1. First call should be to make an appointment with ALL your credit providers. Speak to them about your situation and ask that they give up to 12 months’ leeway from payments, this will give you some relief from immediate payments- However please note that it is your best interest to maintain open communication with your creditors and keep them informed of your changing situation. This option is not to be seen as a “get out of jail free card” it is a way of providing relief and is not writing off the debt.
2. Second point would be to restrict your spending to a fact of 50/20/30 that is 50% of current income set towards fixed bills, 20% set towards utilities and variable bills and 30% towards day to day living, yes this is hard to do with you have no or little income but you are in a short term poor position, something you do not plan on staying in.
3. Third and the most effective advice is that it is easier to cure an empty purse than endure one, so lower the income standards, the career standards and set out to improve your cash flow position. This can be done quite easily thanks to items like Uber – Ride Sharing, which Uber are also guaranteeing rates during certain hours. If you fall short due to a lack of pickups they will top up your account. The best hours are of course late Saturday nights where you can get a guaranteed $40 per hour for three hours. That's if you can put up with the traffic. Do that a couple of times per week and you could easily be picking up $600-800 per week. Next is the earn online survey options that pay you via Shopping Vouchers, these can be used to pay for those little extras like going to the pictures or maybe your beer for the week.
4. Finally, ask your Superfund to advise you if you hold any non-preserved funds within your superfund account- these include money held in your fund that you can access at any time, if your fund's rules allow it. We recommend that as a “last resort” as if the amount is high enough, it will be adding to your long term retirement enjoyment from a financial position and as stated, it is easier to cure an empty purse rather than deplete an future asset.

 

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Article by:

Peter Morrison-Dowd

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