When and How Can You Access Super Early in Australia?
Superannuation is money that you save for your retirement.
It is usually locked away until you reach your preservation age, which is between 55 and 60, depending on when you were born.
However, there are some situations where you can access your super early, such as financial hardship, a medical emergency, or when buying your first home.
In this blog post, we will explain when and how you can access your super early in Australia and the benefits and risks of doing so.
We will also provide some tips on avoiding scams and illegal schemes that claim to offer early access to super.
What is Super?
A super investment, or superannuation investment, refers to the contributions made to a superannuation fund, a long-term savings plan designed to support Australians in retirement.
These contributions are typically made by employers, individuals, or both and are invested by the super fund throughout the individual’s working life.
The goal of a Super Investment is to grow these funds so that, upon reaching retirement age, the individual will have a substantial nest egg to support their living expenses.
Different super funds offer various investment options, including shares, property, and fixed-interest investments, each with its own risk and return characteristics.
Who Can Access Super Early?
You can generally only access your superannuation once you reach your preservation age (which ranges from 55 to 60, depending on when you were born) and meet a condition of release, such as retiring from the workforce.
However, in certain specific circumstances, you may be able to access your super early:
Severe financial hardship: If you cannot meet reasonable and immediate family living expenses and have received government income support payments for 26 weeks, you may be eligible to access some of your super.
Compassionate grounds: If you need to pay for medical treatment for yourself or a dependent, pay a home loan to prevent foreclosure, or pay for modifications to your home due to a severe disability, you may be able to access some of your super.
Terminal medical condition: You can access your super if you have a terminal illness.
Permanent incapacity: Also known as a disability super benefit, you may be able to access your super if you are permanently incapacitated.
Temporary residents leaving Australia: If you entered Australia on an eligible temporary resident visa, you could access your super when you leave.
What Are the Requirements to Access Super Due to Severe Financial Hardship?
You can access your superannuation early due to severe financial hardship under specific conditions. The Australian Prudential Regulation Authority (APRA) sets these rules, which are as follows:
Receiving Government Assistance: You have continuously received eligible government income support payments for 26 weeks. These payments might include Newstart Allowance, Disability Support Pension, Parenting Payment, etc.
Unable to Meet Living Expenses: You must meet reasonable and immediate family living expenses. This means you can’t afford everyday costs like rent or mortgage, food, bills, medical expenses, etc.
Application: You must apply to your super fund to withdraw some of your super. Most super funds require you to fill out a form; some might also ask for evidence of your financial situation.
If you’re under your preservation age plus 39 weeks:
- You can’t access more than $10,000 of your super in any 12-month period.
- The maximum amount you can withdraw is limited to the balance of your super account.
If you have reached your preservation age plus 39 weeks:
- You need to have been receiving government income support payments for a cumulative period of 39 weeks since reaching your preservation age.
- There’s no maximum limit on the amount you can withdraw.
Please note that tax may be payable on any super you access early due to severe financial hardship, and accessing super early will reduce the amount of money you have for retirement.
How Do You Access Your Super on Compassionate Grounds?
The Australian Taxation Office (ATO) oversees the early release of superannuation on compassionate grounds. You may apply to access your super early under compassionate grounds if you need money to pay for the following:
- Medical treatment and transport for you or a dependent
- Making a payment on a home loan or council rates so you don’t lose your home
- Modifying your home or vehicle for the unique needs of you or a dependent because of a severe disability
- Palliative care for you or a dependent
- Expenses associated with the death, funeral or burial of a dependent
Here is a general process for how to apply:
Application: You apply directly to the ATO via the MyGov website. As part of your application, you must provide details about your circumstances and why you use it.
Documentation: You must provide specific documentation to support your application. This will depend on the reason for your application. For example, you will need two medical reports from a medical practitioner and a specialist for medical treatment. For mortgage assistance, you’ll need a statement from your loan provider.
ATO Review: The ATO will review your application, which generally takes 14 days.
Accessing Funds: If the ATO approves your application, they will provide you with a letter that you can provide to your superannuation fund to release the funds. Your super fund will then process the payment, which can take some time.
Remember that releasing super on compassionate grounds is strictly regulated, and the conditions are specific and limited.
Also, remember that taking money out of your super early will reduce your retirement savings.
Can Temporary Residents Leave Australia and Access Their Super Early?
Yes, temporary residents leaving Australia permanently can generally access their superannuation early through the Departing Australia Superannuation Payment (DASP). The following conditions typically apply:
Visa has expired: Your eligible temporary resident visa has expired.
Departed Australia: You have left Australia.
Not an Australian or New Zealand citizen or permanent resident: You’re not an Australian or New Zealand citizen or an Australian permanent resident.
To claim your DASP, you can apply online via the Australian Taxation Office’s (ATO) website. You’ll need to provide details and documents, including your super fund details, tax file number (if known), passport details, and Australian visa details.
After your application is processed and approved, the super fund will generally pay your DASP directly, minus any applicable withholding tax.
This tax rate can vary depending on factors such as the components of your super payment (taxable part vs. tax-free component) and the type of contribution (concessional vs. non-concessional).
Remember to check your super fund’s rules, as some may require you to claim your DASP within a certain period after departing Australia. Also, accessing your super this way means those funds won’t be available for retirement.
Scams and Schemes on Early Release of Super
While accessing your superannuation early can provide financial relief in certain circumstances, it’s essential to be aware of scams and illegal schemes that can take advantage of this.
In Australia, these schemes often promise early access to your super for a fee, but they may steal all your money or get you into serious legal trouble.
Here are a few warning signs of potential scams or illegal schemes:
- Promises of early access: Generally, you can only access your super once you reach your preservation age and meet a condition of release. If someone promises to help you access your super early, they may be involved in illegal activity.
- Upfront fees: If you’re asked to pay a fee or provide a commission to get early access to your super, it could be a scam.
- High-pressure sales tactics: Scammers often use high-pressure tactics, such as insisting on immediate decisions, to avoid missing out on an opportunity.
- Unsolicited contact: Be cautious if you’re contacted out of the blue—by email, phone call, or in person—by someone offering to help you access your super early.
- Asking for personal information: Be wary of anyone asking for personal information, such as your super account or personal identification details, which they could use for identity theft.
If you are offered early access to your super, only sign something after checking with the company and providing it to a professional advisor or the Australian Securities and Investments Commission (ASIC).
If you suspect a scam, report it to the Australian Competition and Consumer Commission (ACCC) via the Scamwatch website and to ASIC.
Do You Need Legal Advice on Accessing Your Super Early in Australia?
Accessing your super early can be a complex and challenging process. You may need legal advice on your eligibility, tax implications, and impact on your future retirement income.
You may also need legal assistance if you are involved in a family law dispute that affects your pension.
At Justice Family Lawyers, our experts in property settlement have the experience to help you with all your superannuation and family law matters. We can guide you through accessing your super early in Australia and protect your rights and interests.
Contact us today for a free consultation and learn how we can help you access your super early.
Principal of Justice Family Lawyers, Hayder specialises in complex parenting and property family law matters. He is based in Sydney and holds a Bachelor of Law and Bachelor of Communications from UTS.