Australians given more time to access superannuation early
Cash-strapped Australians wanting to access their superannuation early have been given an extra lifeline. Here’s what’s changed.
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Struggling Australians rushing to access their superannuation early will now be given more time to withdraw their hard-earned cash.
Under changes announced on Thursday by Federal Treasurer Josh Frydenberg those wanting to tap into their retirement savings will be given an extra three months to do so.
Here’s everything you need to know about withdrawing your super early.
HOW MANY PEOPLE HAVE USED THE EARLY ACCESS SCHEME?
Already more than 2.57 million applicants have accessed $30.2 billion from the superannuation savings.
HOW MUCH SUPERANNUATION CAN I ACCESS?
Under the early access to superannuation scheme, those who have suffered an income hit in 2020 could access up to $20,000 tax free.
They could withdraw $10,000 up until June 30 and another $10,000 through until September 24.
Under Thursday’s changes people can now access this second amount of $10,000 through until December 31 this year.
It’s advisable to check the balance of your superannuation before you apply to withdraw it to make sure you have sufficient funds available.
WHAT IS THE IMPACT OF WITHDRAWING SUPER EARLY?
Figures from the MoneySmart calculator show for a 30-year-old withdrawing $10,000 now, once they retired at age 67 it would be the equivalent to $21,500 in lost savings in today’s dollars.
The early access scheme has caused ongoing debate among the political parties and groups representing the super funds.
Industry Super Australia analysis estimated 395,000 people under 35 eroded their super balance and 480,000 Australians across all age groups wiped out their super completely before the second tranche opened this month.
SHOULD YOU WITHDRAW YOUR SUPER EARLY?
The Association of Superannuation Funds’ chief executive officer Dr Martin Fahy has also encouraged people to consider all their financial options before tapping into super, such as accessing JobKeeper or JobSeeker.
“If low income earners and young people’s superannuation continues to be eroded by the early release stimulus scheme, we risk losing sight of superannuation’s intended purpose, which is to provide adequate income for Australians in retirement,” he said.
“These are anxious times and we face challenging economic headwinds.”
SHOULD THE COMPULSORY SUPER GUARANTEE RATE INCREASE?
Industry Super Australia chief executive officer Bernie Dean said the lengthening of the time to access super should cement the scheduled increases of compulsory super payments from 9.5 per cent to 12 per cent which begin increasing next July through until 2025.
“The extension of the scheme highlights how vital sticking to the legislated super rate rise (by .5 per cent in 12 months’ time) is for Australians to help rebuild their retirement balances,” he said.
“We support the policy intent of this scheme to deliver money to those in need but we’ve also seen how it can be misused – through troubling reports of fraud, significant amounts of ineligible applicants and evidence super is being used for highly discretionary spending.”
ARE YOU ELIGIBLE?
• Eligible citizens and permanent residents of Australia or New Zealand can access $10,000 in the 2021-21 financial year up until December 31.
• Eligible temporary residents could only access $10,000 up until June 30 this year.
• You must be unemployed or be eligible to receive JobSeeker, Youth Allowance, the Parenting Payment, Special Benefit of the Farm Household Allowance.
• After January 1 this year you were made redundant, your working hours were reduced by 20 per cent or more.
• You are a sole trader and your business was suspended or there was a reduction in turnover of more than 20 per cent.
Originally published as Australians given more time to access superannuation early