Early Release Of Super: Everything You Need To Know

There are five main circumstances under which you can access your superannuation via your fund before your preservation age:

• Access on compassionate grounds

Compassionate grounds cover purposes such as paying for the medical care of you or a loved one, making a home loan payment in order to avoid foreclosure on your home, and accommodating a disability for you or a family member.

• Access due to severe financial hardship

You may be able to access your superannuation early if you have been on government payments for 26 weeks continuously and are unable to meet (reasonable) living expenses.

• Access due to terminal illness

You should be able to access your superannuation if you have been diagnosed with a terminal medical condition and doctors sadly expect you to pass away within the next two years.

• Access due to permanent incapacity

If you are either physically or mentally incapacitated and no longer able to work, you may be able to access total and permanent disability (TPD) insurance benefits in your fund, along with any superannuation accumulated.

• Access due to temporary incapacity 

If you have salary continuance insurance with your superannuation fund you may be able to access that if you are temporarily incapacitated. You may also be able to access any excess contributions (i.e. contributions made above the superannuation guarantee) made into your superannuation up until that point.

The Australian Taxation Office and your super fund have quite strict criteria for meeting the above circumstances and you will need to provide documentation to prove that you meet any of these conditions when you apply for consideration.

One of the Government’s more controversial Covid-era relief measures was to allow peopel to access up to $20,000 of their superannuation in two lots. Between 20 April 2020 and 31 December 2020 eligible Australians who had been affected by Covid-related setbacks were able to access up to $10,000 of their super during the 2019–20 financial year, and an additional $10,000 between 1 July 2020 and 31 December 2020.

The Australian Taxation Office (ATO) says that ​​during that time, they received 4.78 million application requests— a total of $39.2 billion of super—for early release and ended up approving 4.55 million applications for 3.05 million people, or a total of $37.8 billion in early release superannuation.

While potentially beneficial at the time, the measure resulted in many Australians seriously depleting, or completely draining, their superannuation accounts. Analysis by the Australian Prudential Regulation Authority (APRA) found that accounts with remaining balances of $1000 or less accounted for 1.08 million payments and 163,000 accounts were completely depleted.

The Covid early release of super scheme closed on December 31, 2020, but you may still be able to apply for early release of super if you meet any of the five conditions outlined above.

If you are saving for a home, you may also be able to access some of your superannuation under the first home super saver scheme.

Superannuation is a scheme designed to support Australians during retirement, so if you are considering accessing your superannuation early, you need to make sure you have exhausted all other potential avenues of financial support first, such as charities or other organisations that may be able to help.

There are also limits around what you can access. For example, for severe financial hardship, it needs to be a minimum of $1000 up to a maximum of $10,000 and it will be taxed as a superannuation lump sum.

Any amount you access early will make a sizable dent in the amount you end up with when you retire. For example, according to ASIC’s Moneysmart calculator, a 30-year-old with a super balance of $50,000 on a wage of $60,000 will likely retire at 65 on $411,548, but if they withdraw $10,000 at age 30 they would only have $390,681*.

For early release of super on compassionate grounds you need to apply through the ATO, for early release in severe financial hardship you will need to contact your super fund directly, in the case of terminal illness you should be able to apply via ATO services on myGov (super ->manage->withdraw ATO held super).

Early release in the case of temporary or permanent incapacity needs to be applied for directly via your super fund.

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