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Early release of superannuation in response to COVID-19 FAQs

    superannuation
    08 April 2020

    In response to the significant impact and financial stress caused by the COVID-19 pandemic, the government has recently announced changes to accessing superannuation.

    What do these changes mean?

    • If you are experiencing financial stress because of COVID-19, you can access a portion of your superannuation account balance early (before retirement).

     

    How do I know if I can apply?

    You can apply if:

    • You are unemployed;
    • You can receive or are receiving one of the following government allowances:
    • Job Seeker payment
    • Youth allowance for jobseekers
    • Parenting payment
    • Special benefits 
    • You were made redundant or your working hours were reduced by 20% on or after 1 January 2020; and
    • You are a sole trader whose business has been suspended or your profit was reduced by at least 20%.

     

    How much can I withdraw?

    • You can withdraw up to $10,000.00 before 1 July 2020, and up to a further $10,000.00 between 1 July 2020 – 24 September 2020.

     

    How can I withdraw the money? 

    • Applications for early release will be accepted through the myGov website from 20 April 2020.
    • You can register your interest prior to this date by logging into your myGov account and following the ‘Intention To Access Coronavirus Support’ instructions. 
    • The ATO will then process your application and then your nominated superannuation fund will explain how to complete the process and what further information is required.

     

    Will I be taxed on this withdrawal?

    • No, you will not need to pay tax on the amount released.

     

    Will my Centrelink or Veterans’ Affairs payments be affected?

    • No, if you are receiving Centrelink or Veterans’ Affairs payments, these will not be impacted by early withdrawal from your superannuation account.

     

    Under what other circumstances can I access my superannuation early?

    • Compassionate grounds;
    • Severe financial hardship;
    • Terminal medical condition;
    • Temporary incapacity;
    • Permanent incapacity; and
    • Account balance has fallen under $200.00.

     

    What are the disadvantages of making this withdrawal?

    Workers’ compensation  

    • If you are receiving workers’ compensation weekly payments, withdrawing part of your superannuation account balance early may preclude you from receiving these payments for a number of weeks. 
    • Generally, if your withdrawal relates to ceasing work due to injury, your weekly payments may be suspended however, a withdrawal relating to financial hardship may not impact on these payments.
    • It is important to speak to your specific workers’ compensation case manager before deciding to access your superannuation account balance early.

    Superannuation associated insurance – Total and Permanent Disablement, Death or Income Protection 

    • If you do not receive any superannuation contributions from your employer for 16 months or your account balance falls below $6,000.00, the default insurance entitlements attached to your superannuation account may be cancelled.
    • If a withdrawal from your superannuation account causes your balance to fall below $6,000.00 and there is not enough money in the account to cover the premiums, the insurance will stop.
    • This may vary between superannuation funds, so it is important to seek advice specific to your superannuation fund and policy.  

    Retirement savings

    • You will be left with less retirement savings.

     

    Who else should I talk to about this? 

    • The Australian Taxation Office for more information about this policy and early release of superannuation under particular circumstances;
    • A financial advisor before you make this withdrawal;
    • A representative from your superannuation fund to find out what insurance cover you have, and how much money needs to remain in your account so you can keep paying the premiums; or
    • Your workers’ compensation case manager to determine whether a withdrawal under this policy will impact your weekly payments.

    * This piece was written by Aphroditi Bakopanos, Lawyer in the Zaparas Lawyers Superannuation team.