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Accessing Your Superannuation Early

This factsheet focuses on accessing your superannuation early. This factsheet is for information only. It is recommended that you get legal advice about your situation.

Download our printer friendly version here (PDF): Factsheet – Accessing Your Superannuation Early

Accessing your super

Superannuation (super) is a protected asset intended to fund your retirement.

You can access your super:

  • when you turn 65 (even if you haven’t retired); or
  • when you reach preservation age (i.e. the age at which you can retire and access your super benefits) and retire; or
  • when you reach preservation age and continue to work, under the transition to retirement rules; or
  • early, before you reach your preservation age, in very limited circumstances mainly related to specific medical conditions or severe financial hardship.

Your preservation age depends on when you were born. You can use this table to determine your preservation age:

Date of Birth

Preservation Age

Before  1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

From 1 July 1964

60


The Pros and Cons of Accessing Your Super Early

Just because you can access your super, does not mean you should access it. As with all financial decisions, you need to think through the consequences and the pros and the cons. You should consider talking to a free financial counsellor too.

To find your free local financial counsellor go to

PROS

  1. You will have access to funds which may relieve your financial burden.

CONS

  1. You will lose an asset that is protected in bankruptcy and otherwise protected from creditors until you take it out of the fund.
  2. The money will be taxed by the Australian Tax Office (ATO) on release.
  3. If you use all of your super, you may lose your insurance benefits (e.g. income protection, death or total and permanent disability (TPD)) that you may not have known you had. If your severe financial hardship is as a result of a permanent incapacity to work you may be losing valuable benefits.
  4. It may not solve your financial problem and you will have less available for retirement.
  5. It may take too long. It can take months to get your super released, if at all. If you do not provide all of the correct information your application may be sent back to you and you will be sent to the back of the queue. If you are relying solely on early release of super your financial circumstances may get worse while you are waiting.
  1. It may result in you having to:
    1. pay more tax;
    2. pay more child support;
    3. accept lower Centrelink payments; and/or
    4. receive less child support.

WILL MY SUPER FUND RELEASE MY SUPER?

Not all super funds allow early access to your super on either severe financial hardship or compassionate grounds. Check with them first.

If they do not allow early access, and you have considered all of your options (including loss of insurance cover) and access is appropriate – you can switch funds and then apply for early access.

AM I ELIGIBLE?

To get your super released early, you must:

  • be in severe financial hardship (apply to your super fund) (see below); and/or
  • meet a compassionate ground (apply to Department of Human Services (DHS) (see below); and/or
  • have a terminal illness (apply to your super fund); and/or
  • meet the definition of TPD (apply to your super fund); and/or
  • have less than $200 in super (apply to your super fund); and/or
  • be a temporary resident leaving Australia for good (apply to your super fund).

You can apply for early release of super to help your partner, child or other dependant. It must be for compassionate grounds.

  1. Accessing your super due to severe financial hardship

To be eligible to access your super due to severe financial hardship – before you reach your preservation age – you must:

  1. be unable to pay reasonable and immediate family living costs; and
  2. have been in receipt of 26 weeks continuous eligible[1] income support Centrelink benefits.

The minimum amount that can be paid is $1,000 (unless your super balance is less than $1,000) and the maximum amount is $10,000. It will be paid as a lump sum. You can only make one withdrawal from your super because of severe financial hardship in any 12 month period.

To be eligible to access your super due to severe financial hardship – after you have reached your preservation age – you must:

  1. still be out of retirement (i.e. working, looking for work and/or you must not have notified the ATO you have retired); and
  2. have been in receipt of 39 weeks continuous eligible[2] income support Centrelink benefits since you reached your preservation age.

There is no restriction on the amount you can withdraw after you have reached your preservation age.

To apply you will need to contact your super fund and generally:

  1. set out the cause of your severe financial hardship;
  2. specify how you will spend the money if it is released. If there are specific bills that need to be paid, the fund will often require you to provide copies;
  3. provide evidence of yours and your family’s income and expenditure;
  4. show you are in arrears, not just that you have debts, and
  5. provide your super fund with a letter from DHS or Centrelink showing you in receipt of continuous eligible income suppoer payments. This letter is called a Q230 Financial Hardship letter.

If the super trustee is not satisfied that your super will alleviate your financial hardship then they may decline to release the funds.

  1. Accessing your super on a specified compassionate ground

To be eligible to access your super on compassionate grounds you must:

  1. generally show funds are required to pay:
    1. for medical treatment or medical transport for you or a dependant;
    2. a loan to prevent your home being sold (usually by the lender or local council) (“mortgage assistance”) (see below for further information) and the mortgage stress handbook;
    3. to modify your home or motor vehicle to accommodate for the special needs of you or a dependant arising from a severe disability;
    4. for expenses associated with the care for a terminal medical condition for you or a dependant; or
    5. for funeral expenses of a dependant.
  2. demonstrate you lack financial capacity to pay for the expense without accessing superannuation.

To apply to access your super on compassionate grounds you will need to:

  1. Contact your super fund and check that they will release your super on compassionate grounds if approved by the DHS).
  2. If they do, apply to DHS by:
    1. set up a Centrelink online account if you don’t already have one;
    2. collect quotes and unpaid invoices for the amounts you need;
    3. collect documents to prove you need the money – these are different for each compassionate ground (see the DHS website for details); and
    4. submit your application form and supporting documents to the DHS.
  3. If the DHS approve the application, send the approval to your super fund and supply any identity documents.

It can take the DHS up to 28 days to either accept or deny your application. If your application is denied, you can request a review within 14 days of the decision being made.

If your super fund will not release your funds on compassionate grounds you may consider transferring to a fund that will.

EXAMPLE: Applying to Access Your Super on Compassionate Grounds: Mortgage Assistance

Mortgage assistance is available to prevent your mortgage lender or local council taking action to sell your home for mortgage arrears or unpaid rates. Access to your super should only be considered if all other options have been exhausted. Even then, caution needs to be taken as you should be very certain you can pay your normal mortgage payments after your super is released. If you cannot, you need to consider selling your home as you risk the super you have withdrawn and your house. See our Factsheet: Mortgage Stress – Do I need to sell my house?

If you are going to sell your house anyway you should not access your super. Again, this will simply result in you losing your super, your house and the taxed portion of the released super (which will go to the ATO).

NOTE: If you intend to sell your property, it is unlikely DHS will agree to the release. If you have your property on the market to sell as an alternative option in the event that DHS does not approve your application for release, you should provide a statutory declaration with your application stating that you intend to take the property off the market once the super is released. You should not swear false statutory declarations, as this may amount to an offence.

Before applying for the release of your super, you should try to negotiate with your lender or council for a repayment arrangement or potentially capitalising the arrears (that is, add it to your loan balance and let you pay it off over time). This may avoid the need of having to apply for your super at all. It is also recommended you see a free financial counsellor. See our Getting Help Factsheet and Financial Hardship Factsheet.

How much super can be released on the grounds of mortgage hardship?

The maximum that can be released is equal to three months repayments plus twelve months interest on the balance of the loan. However, the fund will only release the amount required by the lender or the local council, which may be less than the maximum amount.

If the amount you need is more than you have in super, you’ll need to either:

  • reduce the arrears; or
  • provide a letter from the lender confirming they will accept the amount available in super to stop the sale of the home; or
  • consider other options, for example, selling your home or another asset.

HOW TO APPLY TO RELEASE MY SUPER FOR MORTGAGE ARREARS OR COUNCIL ARREARS

Step 1

Speak to your home lender’s hardship department or your local council. Negotiate a hardship arrangement. Even if you are applying for your super you still need to negotiate a hardship arrangement while you do this. Speak to a financial counsellor (call the National Debt Helpline on 1800 007 007) or get legal advice about all options available to you.

Step 2

Contact your super fund and check that they will release your super on compassionate grounds if approved by DHS.

Step 3

Submit your application to DHS with supporting documentation. When applying for release on the grounds of mortgage hardship:

  1. The property under threat must be your principle place of residence (not your holiday home or investment property). If you are not living in the property you should get legal advice.
  2. The person applying for the release of super must also be the debtor (or one of the debtors) and responsible for making the mortgage repayments or council rates. Super will not be released to pay a mortgage in another person’s name, unless it is your principal place of residence.
  3. You must have no other financial means to repay the arrears such as savings or selling another asset. You should speak to a financial counsellor or get legal advice.
  4. You will need a letter from your lender, council or other creditor on its letterhead to give to DHS which:
  • is dated;
  • is no more than 30 days old from the date you submit it;
  • states:
    • there’s an overdue amount;
    • the lender will sell your home if you don’t pay it;
    • the address of the home;
    • the total amount for three months of loan repayments;
    • the total amount for the next 12 months of loan interest;
    • the lender’s name; and
    • the bank account number of the loan.

Step 4

Keep making your repayments or the amount agreed under your hardship arrangement because if your arrears exceed the amount available in your super, your application may be declined or your lender may still exercise their rights to repossess your home (because the super obtained is not sufficient to cover the arrears).

You should continually keep your lender up to date as to the progress of your application.

You should also ensure that the lender does not take legal action while you are waiting as the legal fees may be added onto your loan account further increasing your arrears. If you receive a statement of claim (or summons) commencing legal proceedings you need to lodge a complaint in your lender’s external dispute resolution scheme immediately! See our Financial Hardship Factsheet

HOT TIP

Do not make promises that the super will be released by a certain date. You are not in control as to how fast DHS will process your application, or how long your super fund will take after that. Your application may get delayed for any number of reasons. You do not want to breach an agreement for things outside of your control.

Step 5

If DHS approves the release, you will need to send the original DHS letter to your super fund. If you have more than one super fund, you will need to provide a certified copy of the DHS approval. You will also need to comply with your super fund’s requirements. This may include a separate form and identification verification.

Step 6

Pay the money to the lender. Sometimes your super will be released to you directly and not to the lender. You should make sensible decisions as to where the money should be paid. If you can save your home and even make a few payments in advance, you should consider doing so. If your lender says the money is not enough and they will proceed to repossess and sell the property regardless, you should consider putting some money aside for rent and bond on an alternative place to live. If you are not sure, speak to a financial counsellor or get legal advice.

For more information you can visit the DHS website (search for “early release of superannuation” or call 1300 131 060), and for general information on superannuation refer to the ATO website or call 131 020.

This is only a brief guide and it is recommended that you speak to a financial counsellor to discuss the best option for you in your circumstances. See our Getting Help Factsheet for a list of additional resources.

Last Updated: September 2017

[1] An eligible income support payments includes Newstart Allowance but does not include Abstudy, Austudy or Youth Allowance.

[2] An eligible income support payments includes Newstart Allowance but does not include Abstudy, Austudy or Youth Allowance.