Financial hardship
If you are under preservation age by more than 39 weeks, you may be able to access your superannuation early in the case of financial hardship. The responsibility for this kind of release rests with your super fund trustees.
You need to apply to your superannuation fund, and you need to meet both of the following conditions:
- Be in receipt of eligible government income support payments for a continuous period of 26 weeks (and still be receiving them).
- Unable to able to meet reasonable and immediate family living expenses.
Reasonable and immediate family living expenses can include overdue rent or mortgage payments, car repairs, medical expenses, overdue bills, and essential groceries.
Your superannuation fund may have other criteria you need to meet, such as a maximum level of assets, as well. You can withdraw a maximum amount of $10,000, minus tax, a year.
Compassionate Grounds
Responsibility for determining eligibility for compassionate release rests with the Australian Taxation Office.
Expenses eligible for release of superannuation on compassionate grounds are:
- Medical treatment.
- Medical transport.
- Modifying a home or vehicle to accommodate a severe disability.
- Palliative care for a terminal illness.
- Death, funeral or burial expenses for a dependant.
- Preventing foreclosure or forced sale of home.
The ATO says that eligible medical treatments may include psychiatric treatment, medicinal drugs, in vitro fertilisation treatments and dental treatments where specific evidence is provided.
But you also have to meet two other conditions, the first of which states that you or your dependant must require the medical treatment to either treat a life-threatening illness or injury, alleviate acute or chronic pain, or alleviate acute or chronic mental illness. It also has to be for a medical treatment that is not readily available through the public health system.
Preventing Foreclosure or Forced Sale Of Home
If you’ve received a threat to repossess or sell your home from your mortgage lender, due to mortgage arrears; from your council, due to outstanding council rates; or from an enforcement officer, who has been given authority in a court order to sell your home to satisfy an outstanding debt you owe another entity, you may be able to access some of your superannuation under compassionate grounds to make a mortgage payment.
Under these conditions you may be able to use superannuation to pay your mortgage, but these are not particularly favourable conditions to find yourself in. You also need to have received written notice from your mortgage provider or council in the form of a default notice or similar, that needs to be provided as proof when applying to the ATO to have your super released in this way.
“Accessing your super early should be a last resort—the withdrawals are subject to tax and there is a significant cost to your retirement savings, meaning you could be left worse off over the long-term,” SMC’s Brumby says.
