Your super is there to help fund your retirement. However, if you’re finding it hard to make ends meet, you can apply to access your super early to help pay your living expenses.
Severe financial hardship
If you’re experiencing severe financial hardship, you can apply to access some of your super. This can help pay for basic expenses to support you and your family.
To apply for early release of super under grounds of severe financial hardship, you must meet one of the following criteria:
1. You’re under your preservation age and:
-
Have received an eligible Centrelink or Department of Veterans’ Affairs (DVA) payment continuously for at least 26 weeks before applying and are still in receipt of these payments at the time of your application,
AND
-
Satisfy the Trustee that you can’t meet reasonable and immediate family living expenses.
If the Trustee is satisfied, the trustee will determine a single lump sum amount of between $1,000 (or the balance of your benefit if it is less than $1,000) and $10,000. You can only receive one payment every 12-months.
2. You’re over your preservation age and:
-
Have received an eligible Centrelink or DVA payment for a total of 39 weeks since reaching your preservation age,
AND
-
You’re in paid employment for less than 10 hours a week, or you’re not employed at all, at the time of your application.
If you qualify on this basis, the Trustee may release your entire benefit.
What are the tax implications?
We’ll deduct withholding tax from your balance when we process the payment. The amount of tax withheld is required under law and is the maximum tax payable.
The rates of withholding tax which apply are:
|
Component |
Age |
Tax-rate |
|---|---|---|
|
Tax-free |
Any |
Tax-free |
|
Taxable (taxed element) |
< preservation age |
20%i, # |
|
preservation age to 59 |
First $230,000⁺ at 0%# Excess at 15%# |
|
|
60 – 64 |
Tax-free |
i Plus Medicare levy of 2% for 2022/2023.
⁺ Low rate cap of 2022/2023.
# The taxable component must be included in your tax return for the ATO to make assessment of your overall tax position. The tax rates quoted are the maximum amount payable. However, the inclusion of the taxable component as part of your income may impact your entitlement to other Government benefits and concessions based on assessable or taxable income.
What is my preservation age?
Your preservation age is:
|
Date of birth |
Preservation age |
|---|---|
|
Before 1 July 1960 |
55 |
|
1 July 1960 – 30 June 1961 |
56 |
|
1 July 1961 – 30 June 1962 |
57 |
|
1 July 1962 – 30 June 1963 |
58 |
|
1 July 1963 – 30 June 1964 |
59 |
|
From 1 July 1964 |
60 |
Important facts to consider before accessing your super early
Super is a long-term investment to help fund your retirement. Therefore, it’s important to consider how an early withdrawal will impact:
-
Your retirement income
-
Any tax you may need to pay
-
Insurances paid through your super
-
The impact taking a super payment may have on any government benefits you’re receiving
Everyone’s situation is different and depending on your stage of life, retirement plans and other specific goals, you may want to call us today if you have any further questions.
Your financial wellbeing
If you’d like some help assessing your eligibility for benefits, and strategies to improve your retirement savings, a financial coach may help set you on the right track. Their job is to help you with every aspect of your financial life, while keeping you on track to achieve your goals.
Make a financial hardship withdrawal application
If you receive benefits from Centrelink, you will need to:
-
Complete the Early release of super form, and
-
Provide Proof of Identity, through any two of following forms of identification:
-
a valid Passport
-
current Driver’s Licence
-
current Medicare Card
-
If you receive benefits from the Department of Veterans’ Affairs (DVA), you will need to:
-
Contact the DVA on 133 254 or go to dva.gov.au to obtain a confirmation you’ve received an Australian Commonwealth Income Support Benefit payment for a continuous period of 26 weeks. Check the date on the letter as it’s only valid for 21 days after issue.
-
Complete the Early release of super form
-
Attach the original copy of the DVA confirmation letter, and
-
Make sure you complete the Proof of Identity as set out on page 7 of the Early release of super form.
Once we’ve received all the information requested, your application will be reviewed and will usually be processed within 5 working days.
Other situations you can access super early
There are other unique circumstances where you may be able to access your super early. But there are strict eligibility requirements you must adhere to.
Some of these circumstances include:
-
First Home Super Saver scheme: If you’re a first-home buyer, you can personally put a little extra money into your super – up to $15,000 a year (and up to a total of $50,000 contributions across all years) – and then access this money, as well as any returns you make from it (as calculated by the ATO based on a set rate), to put towards a home deposit for your first home
-
Compassionate grounds: if you cannot meet certain expenses like medical, funeral costs or mortgage repayments to prevent you from losing your home, you can apply to withdraw some of your super. Applications under compassionate grounds are assessed by the ATO.
-
Terminal medical condition: if you’ve been diagnosed with a terminal illness and have less than 2 years to live–as certified by two medical practitioners–you can apply for early access to your super
-
Incapacity: if you have a physical or mental condition that stops you from working in some capacity or completely, you may be able to access your super as a lump sum or in regular payments depending on whether you are permanently or temporarily incapacitated.
-
Leaving Australia: if you were a temporary resident in Australia, have now left the country and your visa has expired, you can apply to withdraw your super
Please reach out to us on Phone (03) 51 433 450 if you have any questions or require any information.
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at December 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.
