While superannuation (super) helps people to save for retirement, the Federal Government has recognised the need for those individuals who are affected by the COVID-19 to make early withdrawals of funds on compassionate grounds.
1. You may be able to access some of your super early. The Federal Government has announced introduced temporary changes to super access in response to COVID-19.
2. These changes would potentially allow people financially impacted by the COVID-19 to access up to $10,000 of their super in 2019-20 financial year and a further $10,000 in 2020-21 financial year.
3. Applications for this early release payment will be accepted by the Australian Tax Office (ATO) from 20 April 2020 and members will have until 25 September 2020 to apply.
If you are considering applying for an early release on compassionate grounds relating to COVID-19 you will need to apply to the ATO and eligibility will be based on a few criteria, e.g.
- you are unemployed; or;
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance;
- on or after 1 January 2020:
- you were made redundant; or;
- your working hours were reduced by 20 per cent or more; or
- if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
The claiming process will be through the myGov function on the ATO website.
Once the ATO has made a determination it will write to the member and also the super fund to release the early release payment.
Some great tools
to gain a better understanding of the current Treasury support and recent announcements including fact sheets and additional resources go to:
Important note relating to insurance
While the Federal Government’s new COVID-19 measures allow temporary access to your super savings, you should consider whether to leave a reasonable account balance if you want to keep your insurance.
It’s important to be aware that your insurance cover may be cancelled if your super account balance is insufficient to support the monthly deduction of insurance costs.
The balance you maintain will depend on the cost of your insurance, which can vary on a number of factors such as your age, occupation, and any special loadings you may have. Keeping your account balance over $6,000 and making regular contributions is one way of maintaining insurance cover in your super.