People often think of superannuation as being a savings account for your retirement. But in certain situations, you can withdraw your super before you reach retirement age.
When can you access your superannuation?
Under normal circumstances, you can withdraw your accumulation account balance when you reach your 'preservation age'. This is the age you can access your super when you retire or have started transition to retirement. In Australia, your preservation age depends on when you were born:
- if you were born before 1 July 1960, your preservation age is 55
- if you were born from 1 July 1960 to 30 June 1961, your preservation age is 56
- if you were born from 1 July 1961 to 30 June 1962, your preservation age is 57
- if you were born from 1 July 1962 to 30 June 1963, your preservation age is 58
- if you were born from 1 July 1963 to 30 June 1964, your preservation age is 59
- if you were born from 1 July 1964 onwards, your preservation age is 60.
If you haven't yet reached your preservation age, there are circumstances under which you can access super early. Here are five reasons you can claim for the early release of superannuation.
Reason 1. When you're unable to work due to an injury or illness
The most common reason we see people accessing their super early is on the grounds of permanent incapacity. This is when people are unable to work due to an injury or illness and are able to access their total and permanent disablement (TPD) insurance.
Most super funds include TPD cover. If you're in a financial predicament and can’t wait for the TPD assessment and payment, you might consider withdrawing your super early on the grounds of permanent incapacity.
Reason 2. When you require access to your super for compassionate reasons
You might choose to lodge a claim for early release of super on compassionate grounds. Examples include needing:
- to pay for medical treatment for you or a dependant
- to prevent the lender who holds your mortgage from selling your home
- to pay for the funeral of a dependant
- to pay for palliative care
- to alter your home or vehicle to accommodate a disability.
Reason 3. When you're impacted by a terminal medical condition
If you're living with a terminal illness, you can make a claim to access your super early. Making a claim requires a medical certificate from two doctors, including a specialist. The certificate needs to state that you suffer from an illness that’s likely to result in your death within 24 months.
Reason 4. When the value of your superannuation is less than $200
You can make a claim to access super early if the fund’s value is under $200. For instance, let's say you started to make contributions to a new super account. But once you change employers, you stop putting money into that fund. In this instance your fund isn't growing — it's just a balance sitting there. If the dollar value of this balance is less than $200 you can apply to withdraw the money.
Reason 5. When you're saving for a deposit for your first home
The First Home Super Saver Scheme was established by the Australian Government to help Australians save the deposit to buy their first home. From 1 July 2018, you can withdraw up to $30,000 of voluntary contributions made after 1 July 2017 from your superannuation account.
How to access your super early
If you want to access your superannuation early, you need to contact your fund directly to find out what supporting evidence you should provide before starting your claim application.
It’s difficult to estimate how long a claim may take, because there are no statutory time limits for the fund to make a decision. It’s a good idea to regularly prompt them for updates regarding your application.
Ensure the information and documentation you provide are complete and support the eligibility criteria. For example, if someone falls short of the requirements for a terminal medical condition, or if the fund disagrees that a person is permanently incapacitated, it may decline the early release of super on those grounds.
You may need to contact a tax advisor or accountant to find out whether any tax is payable on the superannuation amount withdrawn.
It’s worth mentioning that you don’t necessarily need a lawyer to draw down or withdraw on your account balance – you can approach your super fund directly. However, if you want to make a claim on the grounds of permanent incapacity, and you also have insurance on your superannuation account, you might also have a claim for TPD.
This is where we can help. Maurice Blackburn Lawyers can carry out free investigations with your super fund to find out whether you do have insurance cover and, if so, what level of cover you have. We can discuss making a claim on your behalf.
Find out more about how you can access your superannuation early.