Q: I have been unemployed for 10 months now and I am still having problems finding work. I’ve got bills to pay off and I’m finding it hard to do that with the tiny amount I get from Centrelink each fortnight. Is there any way I can claim I have financial difficulties and use my superannuation towards my bills?
Trish’s response: I’m sorry to read about your troubles. Yes, in certain circumstances individuals suffering financial hardship may be able to access a portion of their super benefits.
Note that even if you satisfy the conditions for early access to super benefits due to ‘severe financial hardship’ you may belong to a super fund that doesn’t permit access on these grounds. As a preliminary step, check with your super fund as to whether they permit benefit withdrawals for financial hardship.
Quoting directly from the APRA website, the rules for the ‘severe financial hardship’ condition of release are as follows:
If you have been receiving an eligible income support payment from Centrelink, you may be able to apply direct to your superannuation fund/RSA for the early release of your superannuation funds.
To be granted an early release under this ground you must:
- be in receipt of a Commonwealth income support payment, and have been so, continuously, for the last 26 weeks; and
- satisfy the trustee/RSA provider that you are unable to meet reasonable and immediate family living expenses.
If you satisfy both of the above, the trustee/RSA provider may, in any twelve month period, release to you one lump sum payment. The lump sum payment will be no more than a gross amount of $10,000 and no less than $1,000 (or the balance of your benefit if it is less than $1,000).
If you are aged 55 years and 39 weeks or more, an alternative, optional, objective test of severe financial hardship may be applied to you. That is, you must:
- have received a Commonwealth income support payment for a cumulative period of 39 weeks after reaching age 55; and
- not be gainfully employed on a full-time or part-time basis on the date of your application to the trustee/RSA provider.
If you satisfy this test, the trustee/RSA provider may release your entire benefit.
In all cases, as part of the objective test, applicants will need to provide the trustee/RSA provider with a letter from Centrelink, the Department of Veterans’ Affairs or a Commonwealth Community Development Employment Project (CDEP) grantee organisation confirming that you meet one of these tests.
You are not required to contact APRA to make application for release under this ground.
(extract from the APRA website)
Warning: You may not be aware that if you are permitted to access your super benefits, then 20% tax (and possibly up to 25% tax depending on the type of super fund that you belong to) will be deducted from the super benefit before it reaches your hands.
SIGN UP TO OUR EMAIL NEWSLETTER for all the latest information, Q&As, and tips about superannuation. View latest newsletter | View previous newsletters
Copyright Trish Power
Hi - I'm Trish Power and I am the author of