ACCESSING YOUR SUPERANNUATION EARLY
This factsheet focuses on Accessing Superannuation Early. This fact
sheet is for information only. It is recommended that you get legal
advice about your situation.
For more information you can visit the website of the Department
of Human Services (DHS) (www.humanservices.gov.au - search for
‘accessing super’), and for general information on superannuation
refer to the ATO website (www.ato.gov.au/super) or call 13 28 61.
1. Access at preservation age (now 55 but moving to age 60)
2. Transition to retirement if age 55 or more and still working
FACT SHEET
3. Accessing your superannuation early – before you reach your
super preservation retirement age.
Superannuation (“super”) is a protected asset intended to fund your
retirement. There are very limited circumstances where you may
be able to access it early on specified compassionate grounds and
severe financial hardship.
Just because you can access it, does not mean you should access
your super. As with all financial decisions, you need to think through
the consequences, the pros and the cons.
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PROS
1. Relief from current financial burden
CONS
1. Loss of an asset that is protected in bankruptcy and otherwise
protected from creditors until you take it out of the fund.
2. Taxed by the Australian Tax Office (ATO) on release at 21%.
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Fact sheets are information
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3. If you use all of your super, you may lose your insurance benefits
(e.g. income protection, death or total and permanent disability
– known as “TPD”) that you may not have known you had. If
your severe financial hardship is as a result of a permanent
incapacity to work you may be losing valuable benefits.
4. It may not solve your financial problem – and your super funds
available for retirement will have reduced.
5. It may take too long – it can take months to get your super
released (if at all). If you do not meticulously supply all of the
correct information your application may be sent back to you
and you will be sent to the back of the queue. If you are relying
solely on early release of super your financial circumstances
may get worse while you are waiting.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION EARLY
STEP 1 – WILL MY SUPERANNUATION FUND RELEASE THE
FUNDS?
Not all super funds allow early access on either severe financial hardship
or compassionate grounds. Check with them first.
If they do not allow early access, and you have considered all of your
options and access is appropriate – you can switch funds and then apply
for early access.
STEP 2 – AM I ELIGIBLE?
You must be in Severe Financial Hardship
FACT SHEET
Over 55 years old, not retired
You must have:
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Received 26 weeks continuous eligible* income support Centrelink
benefits; OR
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a minimum of 39 weeks cumulative eligible Centrelink benefits since
reaching 55; AND
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you cannot be gainfully employed on a full or part-time basis on the
date of your application to the Trustee
If you are accessing it as an over 55 year old there is no restriction as to
amount.
Under 55 years old
You must:
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have been in receipt of 26 weeks continuous eligible* income
support Centrelink benefits
If you are accessing it as an under 55 year old the amount released in a
12 month period as a single lump sum cannot be less than $1,000 and not
more than $10,000.
(*an eligible income support payments includes Newstart Allowance, but
does not include austudy or youth allowance)
Whether you are over or under 55, you need to obtain a Q230 (under 55)
or Q251(over 55) form which can be obtained from the Department of
Human Services (DHS) confirming that you have the eligible income for
the 26 weeks. You then have 21 days only to provide the letter to your
superannuation fund. Your fund may have its own form that you need to
complete as well.
Even if you have the DHS letter, you need to satisfy the superannuation
trustee that you are unable to meet reasonable and immediate meet
family living expenses.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION EARLY
Generally, you will need to:
a. Set out the cause of your severe financial hardship; AND
b. HOW you will spend the money if it is released. If there are
specific bills that need to be paid, the fund will often require
you to provide copies.
c.
You will often need to provide extensive evidence of yours
and your family’s income and expenditure.
d. You also need to show you are in arrears , not just that you
have debts
FACT SHEET
If the trustee is not satisfied that the funds will alleviate your financial
hardship then they may decline to release the funds.
SPECIFIED COMPASSIONATE GROUNDS
Super may be released on specified compassionate grounds which are
defined in the Superannuation Industry (Supervision) Regulation 1994.
The grounds are specific, and individual application forms can be found
at the DHS website. In addition, you will need to provide supporting
documentation. You need to read the application carefully and supply
sufficient information to identify yourself and to provide adequate
evidence of the grounds on which you are seeking access.
Generally the grounds require you (or your dependent) needing:
●●
Medical or dental treatment
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Medical transport
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Mortgage assistance
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Modification of your home or motor vehicle
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Care for a terminal medical condition
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Funeral assistance
AND you lack financial capacity to pay for the expense without accessing
superannuation.
It is a two-step process, where DHS provides initial approval and then you
need to approach your super fund to approve the release.
This fact sheet focuses on Mortgage Assistance.
MORTGAGE ASSISTANCE
Mortgage assistance is available to prevent your mortgage lender or
Council taking action to sell your home for mortgage arrears or unpaid
rates.
Accessing your super should not be your first response to mortgage
arrears or council rates arrears. First, you should try to negotiate with
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION EARLY
your lender or council for a repayment arrangement or to capitalise the
arrears (add it to your loan balance and let you pay it off over time). It is
also recommended you see a free financial counsellor See Fact Sheet:
Getting Help.
Access to your super should only be considered if all other options have
been exhausted. Even then, caution needs to be taken as you should be
very certain you can pay your normal mortgage payments after the super
is released. If you cannot, you need to consider selling your home as
you risk the super you have withdrawn and your house. See Fact Sheet:
Mortgage Stress - Do I need to sell my house?
FACT SHEET
If you are going to sell your house anyway you should not access your
super. Again, this will simply result in you losing your super, your house
and the taxed portion of the released super (which will go to the ATO).
APPLYING TO RELEASE MY SUPER FOR MORTGAGE ARREARS
OR COUNCIL ARREARS
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Step 1 – Speak to your home lender’s hardship department or
your local council. Negotiate a hardship arrangement. Even if you
are applying for your super you still need a negotiate hardship
arrangement while you do this. Speak to a financial counsellor or get
legal advice about all of your options available to you.
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Step 2 - Check your super fund allows for early release and complete
the application from DHS
You will need to show DHS in your application that:
1. You have no other financial means to repay the arrears. You should
speak to a financial counsellor or get legal advice.
2. It is your principle place of residence (not your holiday home or
investment property). If you are not living in the property you should
get legal advice.
3. The applicant (for super) is also the debtor (or one of the debtors) and
responsible for making the mortgage repayments. Super will not be
released to pay a mortgage in another person’s name, unless it is your
principal place of residence.
4. The lender has issued a “statutory notice of default” being a notice
that clearly shows the lender intends to take action to foreclose on
your principle place of residence
5. You must also provide all of the following:
a. advice that, as at a certain date, payment of a specified
amount is overdue
b. advice that if the mortgagor (borrower) fails to pay the
amount due by a certain date, the mortgagee will:
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION
c.
◊
commence or continue enforcement action to foreclose
on the mortgage
◊
exercise an express, or statutory power of sale over
the security property of the person’s principal place of
residence
the street address of the property
d. the amount that is equal to three months repayments under
the mortgage
e. the amount that is 12 months interest on the outstanding
balance of the loan at the time the statement is made
FACT SHEET
f.
the mortgagee name and account number for the loan.
An amount equivalent to three months repayments and twelve months
interest is the maximum amount that can be released.
The information required from the mortgagee may be set out in a single
letter or document, or in separate letters or documents.
NOTE: If you intend to sell your property, it is unlikely DHS will agree
to the release. If you have your property on the market to sell as
an alternative option in the event that DHS does not approve your
application for release, you should provide a statutory declaration with
your application stating that you intend to take the property off the
market once the super is released. You should not swear false statutory
declarations, as this may amount to an offence.
Keep paying: You should continually keep your lender up to date as to
the progress of your application. You should keep making payments of as
much as you can whenever you can, because if your arrears exceed the
amount available in your super, your application may be declined or your
lender may still exercise their rights to repossess your home (because the
super obtained is not sufficient to cover the arrears).
You should also ensure that the lender does not take legal action whilst
you are waiting as the legal fees may be added onto your loan account
further increasing your arrears. If you receive a statement of claim (or
summons) commencing legal proceedings you need to lodge a complaint
in your lender’s external dispute resolution scheme immediately! – See
Fact Sheet: Financial Hardship
HOT TIP: Do not make promises that the super will be released by a
certain date. You are not in control as to how fast DHS will process
your application, or how long your super fund will take after that. Your
application may get delayed for any number of reasons. You do not want
to breach an agreement for things outside of your control.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION EARLY
FACT SHEET
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Step 3 – If DHS approves the release, you will need to send the
original DHS letter to your super fund. If you have more than one
super fund, you will need to provide a certified copy of the DHS
approval. You will also need to comply with your super fund’s
requirements; this may include a separate form and identification
verification.
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Step 4 - Pay the money to the lender. Sometimes your super will
be released to you directly and not to the lender. You should make
sensible decisions as to where the money should be paid. If you can
save your home and even make a few payments in advance, you
should consider doing so. If your lender says the money is not enough
and they will proceed to repossess and sell the property regardless,
you should consider putting some money aside for rent and bond on
an alternative place to live. If you are not sure, speak to a financial
counsellor or get legal advice.
This is only a brief guide and it is recommended that you speak to a financial
counsellor to discuss the best option for you in your circumstances. See Fact
Sheet: Getting Help for a list of additional resources.
Last Updated: February 2017
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | ACCESSING YOUR SUPERANNUATION EARLY