I want my super now: can I get it?
The point of the retirement savings system is to corral a portion of your life savings until you leave work permanently. But there are ways to access your money if you really need it.
One way is via a condition of release, the technical term for accessing your superannuation early.
These rely on specific tests defined in super legislation that need to be met to access your super savings, with the most common tests relate to your preservation age, however, different preservation ages apply depend on the circumstance.
Standard access rules
Typically, you can access your super when you have reached preservation age, which is between 55 and 60, depending on the year you were born in. You can also access your funds if you have permanently retired and reached the age of 65. It’s worth noting that the definition of ‘permanently retired’ differs depending on whether you are under or over 60.
There are also provisions that allow super fund members to access up to 10 per cent of their balance under the transition to retirement rules, which apply if you are still working and you are aged between 55 and 65.
Transition to retirement is one of the most common mechanisms used to support pre-retirement access to super funds. Under age 65, an income can be paid out of between 4 and 10 per cent of the account balance each year, which is also tax-free over age 60.
Reasons for early access
Early access to super is possible, however, rules are quite complex and depend on evidence from a doctor and approvals from the Department of Human Services and the super fund trustees.
There can be superannuation savings in your account, or "unpreserved monies", that can be accessed at any time. Your super account needs to track these funds, which will be shown on your annual statement, if any such amount exists. While you can access these funds, tax rates apply for taking money before you're 60.
As long as the fund offers it, if you terminate your position with an employer who has contributed to your super fund, you may be able to take your preserved benefits as a lifetime pension or annuity but not lump sum. Super funds can also pay income benefits, such as salary continuance benefits if you are temporarily incapacitated. You may also be able to access your money if you have a terminal medical condition, if you are a temporary resident leaving Australia permanently or if you have severe financial hardship.
What does 'severe financial hardship' mean?
The government defines "severe financial hardship" according to specific criteria. The first definition of financial hardship covers people who have been receiving government income support payments for 26 weeks.
Individuals must be able to demonstrate to the trustee that they are unable to meet reasonable and immediate family living expenses. In these circumstances, the amount the individual can access is restricted to a single lump sum payment of between $1000 and $10,000 in any 12-month period, unless the member’s benefit is less than $1000.
The second definition of financial hardship covers individuals who have received government income support payments for at least 39 weeks after reaching preservation age, and are not employed for at least 10 hours a week. In these circumstances there are no restrictions limiting the amount that may be accessed.
Reason for compassion
Super fund money can also be released on compassionate grounds to meet specific financial needs related to medical treatments, mortgage assistance or funeral expenses. Assessments from the Department of Human Services and fund trustees are used to decide whether fund members can access their funds in such cases. It’s best to leave your retirement nest egg alone unless you really need it. But knowing the funds are accessible can be comforting if you or your family experience a time of serious distress.