Article

Early access to super.

24 March 2020 Read time: 4 min

Author Annie Lillico Lewis

Expert Reviewer Andrew Mackenzie, CFP®

Early access to super in latest stimulus announcements.

Last Sunday, the Government announced its second round of economic stimulus – $66 billion designed to provide relief to both businesses and households in the wake of coronavirus.

This latest round of stimulus builds on the $17.6 billion that was announced only a week earlier, and allows eligible Australians to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

While superannuation helps you save for retirement, the Government’s view is that for those who are significantly financially affected by coronavirus, accessing some of your superannuation today may actually outweigh the benefits of maintaining those savings until retirement.

So here’s what you need to know about withdrawing from your super.

Am I eligible to apply for early access to super?

To apply for early release, you must satisfy any one or more of the following requirements:

You are unemployed; or
You are eligible to receive one of the following payments:
- – 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.

How much of my super can I withdraw?

If eligible, you’ll be able to access up to:

$10,000 of your superannuation before 1 July 2020.
A further $10,000 from 1 July 2020 for approximately 3 months (exact timing will depend on the passage of the relevant legislation).

All amounts withdrawn are tax-free and will not affect any Centrelink or Veterans’ Affairs payments you receive.

How do I apply for early access to super?

If you are eligible for early access to your superannuation, you must apply directly to the ATO through the myGov website.

You will need to certify that you meet the above eligibility criteria. After the ATO has processed your application, they will issue you with a determination and notify your superannuation fund to release your superannuation payment.

Your fund will then make the payment to you. You do not need to apply to your fund directly. However, to ensure prompt payment, you should contact your fund and confirm your details are correct, including your current bank account details and proof of identity documents.

Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Further guidance will be available on the ATO website.

When can I apply for early access to super?

You will be able to apply for early release and access to your superannuation from mid-April 2020.

More information can be found in this Fact Sheet from the Australian Government.

What should I consider before I access my superannuation?

If you’re considering requesting early access to super, there are a range of things to think about before you withdrawing the funds you have been putting away for retirement.

Is it actually a good idea for you to withdraw from your super?

Gaining access to $10,000 or even $20,000, could take the financial pressure off for many of us right now and the Government has allowed access to these funds so you can pay today’s bills.

But, did you know that if you are 45 and your funds are invested in a balanced fund in your super, that $20,000 could be worth $33,984 (in today’s dollars)* by the time you retire? If you are 25, it could be as much as $57,746*.

So it’s really important to carefully consider whether the things you will spend the money on are worth $33,984 or $57,746.

What investments should I sell if I wish to withdraw from my super?

After much market volatility, equities, bonds and listed property are all worth substantially less today than they were at their peak on 20 February this year.

If you do choose to access your super, you may wish to consider selling assets that have retained their value. For example, you may be wise to sell off your cash or some fixed interest investments, rather than equities or property which are trading well below their actual value.

What should I do with the money I withdraw from my super?

As with any lump sum, you will need to carefully consider how you will manage your super payout.

You should be considering what sort of account the funds should be held in, what’s best to spend your money on and how you will manage your cash flow going forward.

What can I do? I withdrew from superannuation and now I don’t need it all.

If by chance you do access your funds and it turns out that you don’t need it all, it is possible to recontribute the funds to super, provided you are within the limits of your contributions caps. You should seek advice before making a contribution.

Will withdrawing from my super affect my insurance?

If you hold insurance through your super, before you go about withdrawing money from your account, it’s wise to check you’ll have enough to cover any ongoing insurance premiums. If you default on your premiums, your insurance could get cancelled.

Additionally, if you have a super balance that falls below $6,000 and insurance is attached to this account, your super fund may automatically cancel your insurances unless you actively advise them that you wish to retain your insurance cover.

What else should I consider before accessing my super?

It’s always a good idea to seek out personal advice before you do anything dramatic.

Drawing down your super may have long-lasting consequences and ensuring it’s both necessary and strategic is wise.

If you wish to get the assistance of a financial adviser, you can always contact us.