We’re all taught that our super is locked away and can’t be accessed until we retire, or die – but it’s actually not the case. There are situations when the door to the super vault can be opened to meet living expenses, to prevent the bank selling your home or to pay for medical expenses or a funeral. If your preserved super benefit is less than $200 (for instance you worked briefly for a job and that’s all you accumulated) then you are entitled to take it out immediately.
As we’ve mentioned over the past few weeks, super money is typically accessed when a person reaches preservation age (normally age 55, but it depends on your date of birth), and retires from work for good – or when a person reaches age 65, regardless of their work status.
But if you face financial stress, you can request access to a portion of your benefits. Clearly, it’s not just a matter of making a phone call and explaining your case; there are stringent rules and boxes to tick. But it is possible for the trustee of the super fund to give you as much as $10,000 (before tax) of your super in any 12-month period to pay for living expenses.
Also, anyone who has been receiving income support from the Commonwealth Government for at least 26 weeks continuously can apply to access some of their super to pay for living expenses.
You can apply to the trustee of your fund to access some of your super on ‘compassionate grounds.’ If you are struggling to pay your overdue mortgage repayments and the bank is threatening to foreclose, you can apply to access your super on ‘compassionate grounds.’ The bank has to be threatening to sell, however. Overdue mortgage payments, or the fear that you may have trouble in the future, will not quality an early release of your super. It also doesn’t include rent. A person who fears being evicted due to overdue rent cannot be granted early access to their super for this reason.
You can also apply to fund funeral expenses, medical expenses or if you need the money to look after a sick dependent (termed palliative care). If you or a dependent is severely disabled you can apply to access your super early to make needed alterations to your house or car.
Super can be accessed early to pay for medical costs for you or your dependant to treat a life-threatening illness or injury, to alleviate acute or chronic pain or an acute or chronic medical condition.
An accident leaving you permanently disabled can trigger an early release of your super. If you are unlikely to ever work in a job that you are qualified to do – either by education, training or experience – then the trustee may permit access to your super. If you become temporarily disabled, check with your super fund to see if your insurance covers you.
Non-residents leaving Australia for good, who have worked on a temporary resident visa, can access their super when they leave. However, this does not apply for Australian citizens leaving Australia permanently. Regardless of where you live in the world, your super is locked up until retirement age. If an Australian living overseas reaches preservation age 55, then in order to access their super they must provide evidence that they have retired permanently.
People aged over 55 who are still working have one option for accessing their super early – and that’s buying a TRIP, a transition-to-retirement pension. The TRIP will only let you access at most 10 per cent of your super balance every year – but it may assist pre-retirees with meeting expenses in hard times.
To see where you sit, first contact your super fund. You should also contact the Australian Prudential Regulation Authority (www.apra.gov.au). There’s handy information on the following APRA page.
This article is of a general nature only and does not take into account your individual circumstances. For advice, TheBull recommends that you employ the services of a qualified financial adviser.