Accessing your super early

What are the conditions for accessing my super on compassionate grounds?

You may be able to access your superannuation benefits on compassionate grounds where you don’t have the financial capacity to meet certain expenses, including:

• medical treatment for you or a dependant
• modifications to your home or transport, or disability aids required because of a severe disability suffered by you or a dependant
• mortgage payments or assistance to prevent the forced sale of your residential home
• palliative care expenses for yourself or a dependant, or
• expenses associated with the death, funeral or burial of a dependant.

Applications for early release of super need to be made to the Australian Taxation Office (ATO) – visit ato.gov.au for more information. Before making an application, you should confirm that your super fund is able to make payments approved under compassionate grounds.

What are the conditions for accessing my super if I have a terminal medical condition?

You may be able to access your super if you’re suffering from a terminal medical condition. You’ll be viewed as suffering a terminal medical condition if two registered medical practitioners certify that you suffer from an illness or injury that is likely to result in your death within 24 months. At least one of these medical practitioners must specialise in a field related to your illness or injury.

If you satisfy this condition of release, you can access the balance of your superannuation account at this time as well as any further benefits accrued within a period of 24 months.

Lump-sum payments released under this condition are tax-free.

What are the conditions for accessing my super if I'm permanently incapacitated?

You may be able to access your super if you become permanently incapacitated.

You should check with your super fund to confirm what evidence is needed to satisfy this condition of release, as processes vary between funds. Generally, one or two registered medical practitioners will need to certify that due to your ill-health (physical or mental) you’re unlikely to engage in gainful employment for which you are reasonably qualified by education, training or experience.

If you satisfy this condition of release, you can withdraw all or part of your super as a lump-sum payment or use it to commence a superannuation income stream.

What are the conditions for accessing my super if I'm experiencing severe financial hardship?

You may be able to access your super if you’re having difficulty meeting reasonable and immediate family living expenses and you're receiving Commonwealth income support payments.

If you’re under preservation age, you must have received Commonwealth income support payments for a continuous period of 26 weeks and be receiving these payments at the time of application. (You’ll need a letter from Services Australia confirming this.)

You’ll need to satisfy your super fund that you’re unable to meet reasonable and immediate family living expenses – ask your fund to confirm what’s needed to verify this.

You’re only able to receive one payment in any consecutive 12-month period.

The minimum payment before tax is $1,000 (or the balance of your super if you have less than $1,000) and the maximum payment is $10,000.

If you have reached your preservation age plus 39 weeks, you must have received Commonwealth income support for a cumulative period of 39 weeks since reaching preservation age and not be gainfully employed on a full or part-time basis at the time of application.

You’ll need a letter from Services Australia confirming receipt of income support, and there’s no limit on the amount that can be released.

What tax will I pay if I withdraw my super early?

The tax treatment applying to payments from your super under early release provisions depend on the payment type, your age and the tax components of your payment. We’ve included some general information below, but it’s important you discuss your circumstances with your financial adviser or tax adviser.

If you’re age 60 or over, withdrawals from your account are generally tax free.

If you are under age 60, your payment will generally be taxed as shown in the table below.

^{*$210,000 for 2019/20 and $215,000 for 2020/21. This amount is indexed to Average Weekly Ordinary Time Earnings (AWOTE) and rounded down to the nearest $5,000 each year. For current cap information, refer to www.ato.gov.au.}

If you’re under age 60 and we don’t hold a valid TFN for you, we’re required to deduct tax on the taxable component of a lump-sum benefit paid to you at the highest marginal tax rate plus the Medicare levy.

If you receive a payment from your super because you’re suffering from a terminal medical condition, no tax is payable.

If you receive a lump-sum payment from your super because you’re permanently incapacitated, the tax-free component may be increased in accordance with tax law, reducing the overall tax you are required to pay.

If you receive a payment because you’re affected by coronavirus, the payment is tax-free.

For more information about the tax treatment of payments from super refer to ato.gov.au.

What will happen to my insurance?

Before applying to access your super under early release provisions, it’s important to consider any insurance you may have inside super.

If your super account has insurance attached to it, this insurance will remain in place (subject to your insurance terms) unless:

• your super account is closed as a result of your withdrawal (in which case your insurance cover will stop on the date your account is closed)
• after your withdrawal, your super account balance isn’t enough to cover the cost of your insurance premiums on their due date (in this case your insurance cover will lapse and your insurance will be cancelled unless additional contributions are made into your super)
• your super account becomes inactive (no contributions or rollovers received into the account) for 16 months, unless you’ve previously requested to keep your insurance even if this happens. Learn more.

If the insurance cover attached to your super account lapses or is cancelled, you may be able to get it reinstated. However, if your insurance is reinstated, there may be a gap in your cover, which means you won’t be insured for any event occurring between the date your cover stopped, and the date it was put back again.

To get your insurance cover back, you may need to open a new account (if your existing account is cancelled) or apply for new cover by supplying health information. This information would need to be assessed as part of your application.

It may not be possible to reinstate your insurance on the same terms or at the same price. And, in some circumstances, you may not be able to reinstate your cover at all.

It can be complicated for certain people to get insurance cover; for example, if you have a pre-existing medical condition or work in a dangerous occupation. Call us on 131 267 to find out more.

Please check your product disclosure statement for more information about the terms of your insurance.

• Learn more about insurance inside super.
• Get an idea for what your insurance needs might be by using our insurance calculator.

You should consider the information above when deciding how much you wish to withdraw from your super. You should also seek financial advice to understand how an early withdrawal will affect your super account and insurance. For example, some insurance plans use the super account balance to determine your level of cover.