For many Australians times are financially tough. It is quite a source of frustration to know that you have a stash of money growing in a super fund, yet are struggling with mortgage repayments and the rising costs of living. Add to this an unexpected illness or significant misfortune and you may find yourself asking the question, “Can I get my hands on my Super early?”.
In most cases, you are not able to withdraw your superannuation until you reach your ‘preservation age’ and retire. Currently the date you reach this age will depend on your date of birth. See table below:
|Date of Birth||Preservation Age|
|Before July 1 1960||55|
|From July 1 1960 until 30 June 1961||56|
|From July 1 1961 until 30 June 1962||57|
|From July 1 1962 until 30 June 1963||58|
|From July 1 1963 until 30 June 1964||59|
|On or after 1 July 1964||60|
It all gets a bit confusing, a situation that is made more so by the reality this table is likely to continue to change as the government make tweaks to the rules about preservation ages. I agree, a very frustrating matter.
While accessing your superannuation early (before you retire), is for the most part, not recommended (after all you will be needing this to fund your retirement), there are some situations where accessing this early (or part of this) is permissible by law.
Strategy 1: You Commence a TRIP Plan (a transition-to-retirement pension):
Once you reach your preservation age, you may continue to work in some capacity, but can commence a super pension. This means that you may withdraw no more than 10 per cent of your account balance in the form of pension payments each year. However, in most cases these payments can’t be converted into lump sum payments. Furthermore, before activating this strategy it is highly recommended that you seek the advice of a financial planner to determine if this is a good strategy in your circumstances.
Strategy 2: The Preserved Amount of Superannuation Benefits is Less Than $200
You can access the balance of your preserved benefits should you leave a job and employer contributions for that job total less than $200. I agree it is not an amount that is likely to make a huge difference to your financial situation… more of a small bonus.
Strategy 3: You Experience Severe Financial Hardship
Severe financial hardship, as determined by the government (no not your standards), can satisfy special conditions that may allow you to receive a portion of your superannuation benefits early.
This may be deemed appropriate if:
- You receive Commonwealth Government income support in the form of unemployment benefits for at least 26 weeks continuously. If the trustee of your super fund agrees that you are unable to meet everyday living expenses you may be granted a single payment of $10,000 (including tax) in any 12 month period.
- If you have reached your preservation age and have been receiving government income support for at least 39 weeks, you may be eligible to receive your entire superannuation benefit.
Strategy 3: Compassionate Grounds
Part of, or all, of your preserved benefits may be released to you on compassionate grounds for extenuating circumstances. This might include you suffering a life-threatening illness or perhaps the bank wishing to take possession of your home (due to overdue loan repayments). Similarly, you may be able to access these funds to pay for a funeral, medical expenses or palliative care. Should you, or one of your dependents be severely disabled, it may be possible to release these funds to allow for home or car modifications.
Strategy 4: Terminal Medical Condition
If you are diagnosed with a terminal medical condition, as defined by superannuation laws, you will be able to access your preservation early. Should a terminal medical condition affect a family member you may still be able to access your preservation according to the release of funds on ‘Compassionate Grounds’ (see strategy 3).
Strategy 5: Temporary Resident Leaves Australia Permanently
In most cases, if you are a temporary resident of Australia, you may access your preservation when you permanently leave Australia. However, specific conditions affect citizens of New Zealand, who in this situation will not be able to access the funds but may transfer these funds to a KiwiSaver account.
Strategy 6: Permanent Disability or Permanent Incapacity
Sufferers of chronic illnesses or serious disability may be entitled to make a claim as part of the permanent disability insurance policy that is often attached to their superannuation account. Individuals who suffer permanent incapacity, that is that due to ill health it is unlikely that they will ever be able to work in a job for which they are qualified, trained or have experience in, can access their superannuation entitlements early.
Strategy 7: Death
Upon your death, the superannuation fund pays your death benefit to your estate, and via this to your spouse, dependants and other nominated beneficiaries. Because of this, it is imperative the correct beneficiaries are identified in the binding nomination through your superannuation fund. It also follows that appropriate estate planning, via an Estate Specialist, is recommended to circumvent the potential for error through the careful perusing of your superannuation documents and the drafting of a legal Will.