On 22 March 2020, the Federal Government announced a temporary measure due to the effects of COVID-19 on the economy. The measure allows individuals to access up to $10,000 of their superannuation this financial year and a further $10,000 in 2020/21.
The question that is digging at the majority of Australians is simply “should I?”
Though there is no simple answer, let’s look at some of the pros and cons of accessing your super and what it may mean for now and in the future.
You can apply for early release of your super if you satisfy one or more of the following conditions:
- You are unemployed.
- You are eligible to receive one of the following:
o jobseeker payment
o youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice)
o parenting payment (which includes the single and partnered payments)
o special benefit
o farm household allowance
- On or after 1 January 2020, either:
o you were made redundant
o your working hours were reduced by 20% or more (including to zero)
o you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more.
Individuals will not need to pay tax on amounts released and the money they withdraw will not affect any Centrelink or Veterans’ Affairs payments you may be receiving.
On 4 April 2020, it was announced that these temporary rules would also apply to most temporary visa holders with work rights, including international students and temporary skilled visa holders.
Before you apply
Before you start the application process, you should:
- set up your myGov account and link it to the ATO
- have your Australian bank account information available – you will need this to complete your application and only Australian bank accounts are accepted
- check your super balance – your actual account balance may be higher or lower than that shown in ATO Online or in the early release application form
There are four ways you can check your super balance:
- Check your total superannuation balance in ATO online services. There will be an ‘as at’ or ‘effective’ date for the balance. In a lot of cases, it will be 30 June 2019 as funds are only required to report to us once a year. This means your account balance may have changed since it was last reported to us, and may be higher or lower than shown on ATO online or in the early release application form.
- If you have access to your super fund’s online member portal, you can log on and check your current account balance there. It might be a good time to establish a login to your fund portal if you haven’t already.
- Check the last statement that your fund issued to you. This might be by paper or email.
- Call your fund, but understand that they have had a large increase in members calling and there could be delays in having your call answered
If your fund is a state-administered fund, you will need to confirm whether they’re allowed to release super due to COVID-19, before you submit an application.
But, should you do it?
There are a number of issues you need to consider before you decide to access your Super.
More than 70% of Australians that have life insurance hold it through super.
If your super balance falls to zero or is too low you may lose your life and income protection cover. This needs to be considered carefully to ensure the long term benefits are not adversely effected by a short term benefit.
Your super is your retirement savings. Money you take out today will be money you don’t have in retirement. The funds today also may be invested in a way that sees the balance significantly impacted by the current drop in the stock markets throughout the world.
Consider what impact withdrawing super today will have on your retirement.
You should also consider what you are going to do with it. If you need it to survive or buy food, then that’s pretty important. If you think you could put it off a mortgage with a rate of 2.5% then possibly that should be reconsidered.
Is it time to take control of my Super?
We believe that every person should take an active interest in their Super. It is your money after all, and should grow into the largest income producing asset you will have at retirement.
We can help you take control of your fund, help invest it in a way that suits you, and educate you along the way so that you make the decisions about your money, rather than being another “default” client.
Whether you decide to take it out or not, it’s time to take control of your superannuation.