Early release of superannuation in response to COVID-19 FAQsPublished on Posted on
Please note that this post was written for Victorian audiences and the information within may not apply to other regions.
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?
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.
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.