Considering accessing your Super early? Stop and think first
The Australian Government is allowing people financially hit by the Coronavirus to access part of their Super early. But should you?
In this blog, we explain what you should consider before doing so.
How the scheme works
The Australian Government is allowing people early access up to $10,000 of their superannuation in 2019-2020 and a further $10,000 in 2020-2021 for those significantly financially affected by the COVID-19 pandemic.
You are eligible if:
- You are unemployed;
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- On or after 1 January 2020;
- You were made redundant; or
- Your working hours were reduced by 20 per cent or more; or
- If you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent or more.
Any withdrawal made will not be taxed and will not affect Centrelink or Veterans’ Affairs payments.
How to apply
Early Release applications are made directly to the ATO through the myGov website: https://my.gov.au
What to consider
Early Release of your account balance should be considered a last resort.
You are not making just a $20,000 decision.
Modelling by the sector this week found people in their 20s who withdraw $20,000 now, could lose up to $84,800 and a 40-year-old up to $63,000 in savings by retirement age.
It may be worthwhile exploring other government initiatives before withdrawing your super.
We recommend anyone considering early withdrawal from their Superannuation to obtain financial advice first.
And don’t forget – insurance may be attached
You also need to be aware that you may have an insurance policy attached to your superannuation account. This insurance policy can cover you if you are unable to work due to injury or illness.
There are typically two types of insurance, income protection (IP) or total permanent disability (TPD). IP benefits are a weekly benefit as a substitute for wages. TPD benefits are a lump sum payment available if you are permanently unable to return to work due to injury or illness.
At RCT Law we have a dedicated superannuation department who can investigate your super entitlements and lodge applications on your behalf. You can contact our office on 1300 366 441 with any superannuation enquiries or email us at firstname.lastname@example.org.