Can you access your superannuation early?

Given the current economic climate, coupled with the Coronavirus and the fact that many of us have very large mortgages, more and more people are wondering whether they can access their superannuation. Many people are concerned (if for example they are retrenched or forced to take an extended period of time off work without pay), how they would finance their mortgage repayments and day to day living expenses.

The main rules for accessing superannuation are:

  1. when you turn 65 (even if you have not retired);
  2. when you reach preservation age (see table below) and retire; and
  3. under the transition to retirement rules, while you continue to work

Preservation age based on the date of birth

Date of BirthPreservation age
Before 1 July 196055
1 July 1960 – 30 June 196156
1 July 1961 – 30 June 196257
1 July 1962 – 30 June 196358
1 July 1963 – 30 June 196459
From 1 July 196460

As we are concerned with people under age 60 who have not retired, the first two conditions are not applicable.

The third option, the transition to retirement will only apply to those readers that are currently aged 57 onwards (and clearly this will also not assist the majority of readers).

There are two other early access options. The first is financial hardship and the second is compassionate grounds.

Access due to Financial hardship

You are able to gain access to at least part of your superannuation as a lump sum if you can demonstrate:

  1. you have been receiving government income support payments continuously for at least 26 weeks; and
  2. you are unable to meet your immediate and reasonable family living expenses

Unfortunately, the maximum you can access is $10,000, which is clearly insufficient for a person with a mortgage and/or a family.

Access on compassionate grounds

You are able to access some of your superannuation on compassionate grounds for unpaid expenses however there are conditions.

Compassionate grounds include:

  • medical treatment and medical transport for you or a dependant
  • palliative care for you or a dependant
  • making a payment on a loan or council rates so you don’t lose your home
  • modifying your home or vehicle, or buying disability aids for you or a dependant because of a severe disability
  • expenses associated with a death, funeral or burial for a dependant

For the average person who loses his job, this is clearly not an option.

Clearly the government needs to reconsider the conditions they impose on granting access to members who are experiencing severe financial hardship. For example, the qualifying period of being on government income support for at least 26 weeks is absurd. The banks would be charging interest and penalty interest on non-repayment of mortgage payments.

Furthermore, the maximum payment of $10,000 is also outrageous. The average weekly wage is $80,000 per annum. That equates to 6-7 weeks pay.

Should you require more information about accessing your superannuation, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.