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 use my superannuation towards my bills, due to my financial difficulties?
A: 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.
You must apply to your super fund to claim early access to your super benefits on the basis of ‘severe financial hardship’. 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 to see whether your fund permits benefit withdrawals for financial hardship.
You must satisfy certain conditions for early access to super benefits based on ‘severe financial hardship’, which are outlined in a special regulation as part of the super laws (Sub-regulation 6.01 (5) and (5A) of the Superannuation Industry (Supervision) Regulations 1994), and also in Schedule 1 of the SIS Act.
You can claim your super early based on severe financial hardship. If you satisfy one of the following two scenarios:
- Received Commonwealth income support for a continuous 26 weeks, and you cannot meet your reasonable and immediate family expenses. You can access up to $10,000 in each 12-month period, and you must take a minimum of $1,000. If your balance is less than $1,000, then you must withdraw all of your super balance. OR
- Reached your preservation age (age 55 for those born before July 1960, and at least age 56 for those born on or after 1 July 1960) and received Commonwealth income support for a cumulative 39 weeks after reaching your preservation age. If you satisfy the second scenario (preservation age and 39 weeks), you can access your full super benefit if required.
I explain the eligibility rules for severe financial hardship in more detail in the SuperGuide article Can I access super early due to ‘severe financial hardship’?
Warning: You may not be aware that if you are permitted to access your super benefits, then your super benefits are likely to be subject to benefits tax, which will be deducted from the super benefit before it reaches your hands.
Accessing super early on compassionate grounds
If you are unable to meet the conditions required for ‘severe financial hardship’, you may be able to access your super early under ‘compassionate grounds’. If you’re eligible, you will have to apply to the Department of Human Services for early release of your super benefits. I explain ‘compassionate grounds’ in the SuperGuide article Accessing super early on compassionate grounds.