Requesting early access to your superannuation account balance before retirement is considered illegal. However, due to the severe financial impact of the COVID pandemic, Australians can now legally a portion of their superannuation account balance early.
The government has imposed stringent criteria that will determine eligibility for early withdrawal of funds. We strongly suggest that you should only consider accessing your superannuation account balance as a last resort. Withdrawing some of your funds not only affects your retirement funds but may also have a significant impact on income protection or life/permanent disability insurance.
You should also exercise extreme caution while dealing with unscrupulous people who claim that they can help you withdraw your retirement funds. Promoters of such illegal early release schemes will be subject to legal prosecution as well as civil or criminal penalties.
If you’re in financial distress, the following essential considerations can help you make informed decisions regarding early withdrawal of your super.
Who Is Eligible for Early Withdrawal of Superannuation Balance?
The latest government guidelines stipulate that those who are eligible for accessing their super can withdraw up to $10,000 until July 21, 2020, and an additional $10,000 after July 21 until September 24, 2020.
The following factors determine if you’re eligible for early access to your super:
- You are currently unemployed
- You are eligible for youth allowance for job seekers, parenting payment or standard job seeker payment
- On or after January 1, 2020:
- Loss in terms of reduced working hours
- You have suffered job loss or redundancy
- Your business revenues (as a sole trader) have been reduced by 20% or more
You may also be eligible to access some of your funds on compassionate grounds. These may include needing to pay for:
- Medical treatment, transport or palliative treatment for you or a dependent
- Paying for your home loan or making payments to the council
- Death, burial or funeral expenses for a dependent
You may also be eligible for withdrawal in case of severe financial hardship.
Key Considerations Before Accessing Your Superannuation Balance
There are three key considerations you should take into account if you are thinking of accessing your super early.
- You must be able to provide documentary or other evidence of severe hardship.
- If you’re already close to retirement age, it may be much more challenging to build the funds back. Women may be at an added disadvantage as they usually retire with less retirement pay (due to unequal pay issues).
- Your superannuation may not have enough liquidity levels on hand for immediate encashment. Retirement funds are designed for long-term benefits and they need time to recover from extreme market fluctuations in the recent past.
Our expert advisors at Owen Hodge Lawyers strongly recommend that the decision to withdraw your superannuation should not be taken lightly. It’s a good idea to seek financial and legal advice regarding immediate and long-term implications. We are always happy to answer questions, clarify doubts and provide maximum assistance to our respected clients.