It's been a long-time dream of many, to get their hands on the money in superannuation funds. In my practice I received numerous inquiries about that throughout the years. However, there are very limited circumstances in fact when you can access your super early. These circumstances are mainly related to specific medical conditions or severe financial hardship.
Before listing here the details, the readers should keep in mind that setting up a self managed superannuation fund doesn't give people the option to use the funds freely. So, it is crucial to find a good financial adviser to stay compliant and in legal boundaries.
Lets see the circumstances that we can access our superannuation funds earlier than it should be. And in the second part, I will list some proposals by the government to change the current system.
1. Access on compassionate grounds
You may be allowed to withdraw some of your super for the following reasons, in other words compassionate grounds:
- paying for medical treatment for you or a dependant
- making a payment on a loan to prevent you from losing your house
- modifying your home or vehicle for the special needs of you or a dependant because of a severe disability
- paying for expenses associated with a death, funeral or burial of a dependant.
2. Access due to severe financial hardship
People who received eligible government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate family living expenses can also access their superannuation fund.
However, there are restrictions for people younger than preservation age plus 39 weeks at the time of application.
3. Access due to terminal medical condition
You may be able to access your super if you have a terminal medical condition.
A terminal medical condition exists if: two registered medical practitioners have certified, jointly or separately, that you suffer from an illness, or have an injury, that is likely to result in death within a period (certification period) that ends no more than 24 months after the date of the certification at least one of the registered medical practitioners is a specialist practising in an area related to your illness or injury the certification period for each of the certificates has not ended.
4. Access due to permanent incapacity
In regards to the permanent incapacity, your fund must be satisfied that you have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do by education, training or experience. At least two medical practitioners must certify this for you to receive concessional tax treatment.
You can receive the super as either a lump sum or as regular payments (income stream). A super withdrawal due to permanent incapacity is subject to different tax components.
5. Super less than $200
You may be able to access your super if your employment is terminated and the balance of your super account is less than $200, or if you have formerly lost super held by a super fund or by us that is less than $200.
Proposed Changes for Early Release Conditions
The Government has released (for a second round of consultation) an 'issues paper' with draft reforms relating to the rules governing the early release of superannuation benefits.
Specifically, these reforms focus on the conditions of release including the compassionate and severe financial hardship grounds.
The paper contains a number of proposals to relax the early release rules for the purposes of financially supporting members in times of need.
Some of the key circumstances where early release is being contemplated include:
- Domestic violence
- Dental treatment
- Disability aids and modified vehicles
- Relaxation of the definition of 'severe financial hardship
Additionally, the issues paper sets out draft proposals to ensure that superannuation is accessed as a last resort in cases of hardship, including the following:
- Mental health
- Overseas medical treatment
- Mortgage foreclosure
For more information please contact us.