What you need to consider before withdrawing your super early

Updated: 21 September, 2020

As of Wednesday 1 July 2020, people facing financial stress as a result of the COVID-19 pandemic are able to once again access their superannuation account balance early.

Accessing your super early should only be done as a last resort because the impact on your retirement account balance and on your insurance can be far more significant than you might expect, particularly if you’ve already withdrawn up to $10,000 in the first phase of scheme.

There are a number of criteria to meet to be eligible to withdraw your super and those who encourage the illegal early release of super may face civil or criminal penalties.

If you are eligible, you will be able to apply through the MyGov website to access up to $10,000 out of your superannuation balance before 31 December 2020.

If you're thinking about withdrawing your super early, talk to us about your options first. Maurice Blackburn provide a no obligation, free super check over the phone. Call us on 1800 196 050.

We discuss who is eligible and our top four things to carefully consider before you withdraw your super balance early.

Who is eligible for early access?

You can apply to access your super early under the pandemic provisions if you are unemployed, or eligible to receive one of the following government allowances:

  • Job seeker payment
  • Youth allowance for jobseekers
  • Parenting payment (including single and partnered payments)
  • Special benefits, or
  • Farm household allowance

You can also apply for early release under the new provisions if you can show that on or after 1 January 2020, you were either made redundant or had your working hours reduced by at least 20%. If you are a sole trader, you need to show that your business was suspended or there was a reduction in your turnover of 20% or more.

These are strict criteria, with potentially severe penalties for those seeking early access to their super who are ineligible.

What should I check with my fund?

Accessing your super early should only be done as a last resort, because the consequences later in life on your retirement balance, as well as in the short term for your insurance as well as other potential risks are significant.

If you are eligible for early access to super and are looking to make an application, here are some things you may want to check with your fund:

Potential fraud

Unfortunately, fraudsters targeted the early release of super scheme during the first stage, with the ATO forced to briefly suspend the program at one point after a number of fraudulent withdrawals were made.

Authorities suspect some fake MyGov accounts were created so that fraudulent applications could be made to access people’s super savings and steal them away to a nominated bank account.

The scheme is open again, however the risks of fraud remains given these applications are vast in number and are being processed as quickly as possible across different groups and agencies.

Identification checks also can be hard to check quickly in the current environment, a new issue that has arisen given the scale of requests coming in.

Crucially, it is also not clear who will pay out in the event of a fraudulent withdrawal so a member is not left out of pocket. Further safeguards are needed from Government to ensure that funds are covered for this risk and so members can be reimbursed if needed.

People being pressured to access super to pay for rent and other essential services

Sadly, there have been reports of real estate agents or landlords pressuring tenants in financial hardship to make an early draw down on their super to cover their rent before they'll be shown any leniency. It is important to know that ASIC has issued a warning that such conduct could lead to jail time and fines as a likely breach of the Corporations Act.

It’s also worth remembering that in the event of bankruptcy, super is one of the few savings quarantined from creditors, given the crucial role of super in retirement.

So if you are in extreme financial distress, we suggest ensuring you have explored all options before drawing on your super, particularly if there is a risk of bankruptcy.

People being pressured by family members and close contacts to access their super

There is undeniably a risk that vulnerable people are at risk of being pressured to withdraw their super in the current environment, including women who may be in abusive relationships and people who are incapacitated and unable to make informed decisions about this. There have also been reports of people going through divorces accessing their super to reduce their ex-partners’ entitlements.

Further safeguards are needed to protect people in these circumstances.


Many people are not aware that they have death and total and permanent disability insurance in their super and some people also have income protection insurance cover.

This is often the only insurance many people have and can be a critical life line - particularly at times like this, where people who are unable to work due to injury or illness may need their insurance more than ever. History shows that disability insurance is most utilised during and in the aftermath of an economic crisis, so the loss of this cover when you need it most could have a significant impact on your financial well-being.

In 2019 laws were passed that directed super funds to cancel insurance attached to member accounts if they don't receive any contributions for 16 months or have a balance of less than $6,000.

The Federal Government have said that if you had an active account with more than $6,000 any time before 1 November 2019 your insurance won't be switched off.

That means if your balance drops below $6,000 due to accessing super under the new provisions your insurance won't automatically be cancelled, which is good.

But if there's not enough money in your account to pay premiums after you’ve withdrawn savings, then your insurance will stop

What else do I need to consider?

While accessing a quick lump sum right now might seem appealing, it’s important to remember that your superannuation is your retirement savings. Particularly for younger workers, a small withdrawal now may have a very significant impact on eventual retirement savings.

Analysis by Industry Super Australia points out that withdrawing $20,000 over the next year could cost a 30-year-old $100,000 at retirement, and a 40-year-old $63,000. So an early withdrawal now might be the difference between a dignified retirement verses one reliant on welfare and the forced sale of other assets.

The decision to make early withdrawal of super funds should not be taken lightly and should be done as a last resort, with proper financial advice to help manage the immediately and longer term financial impacts.

What can I do?

If you’re considering withdrawing funds from you super account, seek financial advice about the impacts. If you don’t have a financial adviser we can refer you to a reputable licensed one.

Find out what insurance cover you have, and if you want to retain your insurance find out how much money you need to consider leaving in your account to pay the ongoing premiums. If you have a medical condition that may cause you to cease work in the future it is very important that you don’t lose your insurance entitlements.

If you’re facing a period of unemployment which may last for 16 months or more, or if you aren’t sure how much money you need to leave in your account to meet the cost of ongoing insurance premiums, we suggest you contact your superannuation fund as soon as possible.

You may be able to retain your insurance cover by finding out how much money should remain in your account, and by giving your permission for premiums to continue to be deducted.

Equally if you are concerned about fraud or the impacts of being pressured to access your super early you should contact your super fund.

If you’re sick or injured and can’t work, you may be able to claim on your insurance now. Maurice Blackburn provide a no obligation, free super check over the phone. Contact us today or call us on 1800 196 050.

It cost you nothing to know where you stand.

Should you withdraw your super early?

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Josh Mennen

Maurice Blackburn Brisbane

Josh Mennen is a Principal Lawyer and Nation Litigation Leader in Maurice Blackburn's Brisbane office. 

Admitted to legal practice in 2007, Josh has an extensive knowledge of legal process he has been responsible for law-changing, leading cases.

He has acted predominantly across superannuation, general insurance, life insurance, financial advice and co…

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