Under certain circumstances, you can legally withdraw super before you reach retirement age. Here, we highlight four such reasons and explain how to go about making a claim for early release of superannuation.
Aussies and preservation age
Under normal circumstances, you can withdraw your accumulation account balance when you reach your‘preservation age’. This is the age at which you can access your super if you’re retired or have started the 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 have not yet reached your preservation age, there are still many circumstances under which you can access super early. We’ll look at a handful of them here, and you can find more instances on our Early Access to Your Super web page.
1. Permanent incapacity
At Maurice Blackburn, probably the most common reason we see people accessing super early is on the grounds of permanent incapacity, due to the fact that we pursue a lot of total and permanent disablement (TPD) insurance claims. A TPD claim is a claim for an insured benefit attached to a person’s superannuation account. If a client is in a financial predicament and can’t wait for the TPD benefit assessment and payment, they may think about withdrawing super early on the grounds of permanent incapacity. However, whether any tax is payable and if so, how much is payable, if a person proceeds with a withdrawal of their super account balance, is a matter for consideration by a tax advisor or accountant.
2. Compassionate grounds
Another reason you might lodge a claim for early release of super is on compassionate grounds. Examples of compassionate grounds include the need:
- to pay for medical treatment for you or a dependent
- to prevent the lender who holds your mortgage from selling your home
- to pay for the funeral of a dependent
- to pay for palliative care
- to alter your home or vehicle to accommodate a disability.
3. Terminal medical conditions
Making a superannuation claim based on a terminal medical condition requires a medical certificate from two doctors, including a specialist. The certificate must state that you suffer from an illness that’s likely to result in your death within 24 months.
4. A super value of less than $200
You can make a claim to access super early if the fund’s value is under $200. For instance, perhaps you’ve paid into a particular super fund, but there’s no insurance on it, and you’ve stopped contributing because you’ve changed employers, so that fund’s not growing — it’s just a balance sitting there.
5. 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 you must provide before starting your claim. You then have to fill out an application with the requisite supporting evidence and submit it to the fund.
It’s difficult to estimate how long a claim can take, because there are no statutory time limits within which the fund has to make a decision. It’s a good rule of thumb to regularly prompt the fund for updates regarding the assessment of your application. You also want to ensure that 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 to grant the early release of super on those grounds.
It’s worth mentioning that you don’t necessarily need a lawyer to draw down or withdraw on your account balance for you—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 come in: 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’ve got, and we can talk to you about making a claim on your behalf.
Hayriye Uluca is a lawyer in Maurice Blackburn’s Greensborough office.