By Darren Withers

With so much uncertainty already this year, many Australians might find they’re struggling financially. While our super is designed to support us in old age, there are also certain circumstances where people can access their super sooner than they planned.

In fact, in the last 6 months of 2019, more than 19,000 Australians were able to access $292.4 million through these means.

As a retirement vehicle, superannuation has rules designed to preserve the money until we reach early retirement age. This is currently anywhere between age 55 and 60, depending upon your date of birth.

However, for people suffering financial hardship there are some options for getting some access to money before this age.

Under severe financial hardship provisions, it is possible to make a request to your super fund for a lump sum of between $1,000 and $10,000. This is accessible once in any 12 month period. To qualify, you need to have been on Centrelink income support payments for at least 26 weeks continuously and be unable to meet family living expenses.

Access is also available on compassionate grounds. This provision allows people to make a request to the ATO to allow a lump sum to be released to cover unpaid expenses such as:

  • Medical treatment for a person or their dependent
  • Making a home loan repayment to prevent foreclosure
  • Home modifications due to disability
  • Funeral costs of a dependent

If approved, the ATO will allow a person to withdraw an amount that they reasonably need to cover the expense.

In addition to these measures, there are also options to access super for those affected by terminal illness, as well as temporary and permanent incapacity.
Over the last few years, the ATO has been inundated with requests for release. In the 6 months to 31 December 2019, the ATO received 34,400 applications. Of these, the ATO approved over 19,000 applications, with an average of $15,200 per application being drawn.

The vast majority of these (17,000) were for medical treatment. Next most common was payments to avoid foreclosure of a home, with 1,200 applications successful.

There has been somewhat of a trend for people to attempt to access super for things such as cosmetic surgery and the like. Early access to super is best left for extreme cases of financial stress. A small withdrawal today can have a large impact on a super balance at retirement. However, for some people, such as those that may have been impacted by the devastating bushfires, the ability to access funds to assist in a time of need is valuable.

If you or any of your family or friends are experiencing financial distress, then it is recommended that financial advice be sought. Our Elston advisers may be able to assist, and the Financial Planning Association may be able to arrange access to pro bono advice in certain situations.

If you would like more information please call 1300 ELSTON or contact us to speak to one of our advisers.