In an effort to provide further assistance to Australians whose employment has been impacted by the progressing Covid-19 pandemic, The Australian Government has announced it will allow eligible individuals to access superannuation early. Until July 1, 2020, eligible people will be able to withdraw up to $10,000 thanks to an early release of super.
While this will provide welcome relief to those who have recently lost their jobs, had to temporarily close their businesses or are struggling to find a job during the pandemic, there are important things you need to know to avoid disadvantaging yourself later on.
Who is eligible to access their superannuation early?
The government’s initiative is intended for Australians whose employment has been directly impacted as a result of the coronavirus pandemic.
To access your super early as part of this scheme, you need to satisfy at least one of the following requirements:
- You’re unemployed; or
- 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.
For more information about the scheme, including how to apply and the timing for being able to access your funds click here.
What to consider before applying to access your superannuation early
From April 1, 2020 new changes coming to Australian superannuation could mean that accessing temporary financial relief now will put you at a disadvantage later. Here’s what you need to know:
If your super account contains less than $6000, or you are under the age of 25, or if your account has been inactive for 16 months or more, you will no longer have default insurance. This includes Total and Permanent Disability (TPD) insurance, life insurance and income protection.
To find out more about these changes and how to stay covered, read our blog here.
For those wanting to access part of their super now:
- Make sure your balance stays above the $6000 mandated limit: you’ll need to take into account ongoing fees, insurance premiums and if you have either reduced or no contributions being added to your fund
- Keep your default insurance intact: super funds need to be contacting each affected member to offer them the ability to opt-in to keeping their default insurance before it gets cancelled. Given the current climate, to make sure you don’t get missed, reach out to your super fund and elect to opt-in to ensure you stay covered for when you need it most
- Consider your future needs: premature access to your superannuation could reverse the benefits and security you have been accumulating especially for retirement. Ensure you plan ahead to keep the default insurance you need and have a plan to resume contributions that will provide adequate savings for your future.
Shine Lawyers - we're here to help
Shine Lawyers have an experienced legal team to assist everyday Australians with accessing their super and insurance entitlements if they cannot work due to injury or illness. Our lawyers are experts in Superannuation and TPD claims and can answer any questions you may have about your potential super entitlements. Contact us now.
This article is intended to provide general information and is not considered as independent financial advice.
Written by Shine Lawyers. Last modified: March 25, 2020.