The Coach: What are your options to access super fund early

There are some circumstances that may allow you early access to super even if you haven’t reached your preservation age.

I am trying to transfer $50,000 from my super fund to my wife, I spoke to my super fund and they advised I could split 85 per cent of my employer’s contributions for the 2016 financial year in 2017. This only comes to $5908. As I am doing this due to financial hardship is there any other options to access funds?

Generally, you cannot access your superannuation before reaching your preservation age and satisfying a condition of release, such as retirement. The current preservation age is 56 and a sliding scale applies for those born after July 1, 1961. If you were born after July 1, 1964, the preservation age is 60. If you were age 65, you would meet a condition of release regardless of whether you work or not.

As you have spoken with your superannuation fund and they have advised you to super split to your wife, I need to assume you haven’t met a condition of release that allows you to access all of your super. There are other circumstances that would allow you early access to your super; including permanent incapacity or terminal illness. In addition, a superannuation fund trustee may release funds if you are suffering severe financial hardship.

In order to be granted early release, on the basis of severe financial hardship and being under preservation age, you would need to be able to provide written evidence that you have been on government income support for at least 26 consecutive weeks, and be in receipt of that income support at the time of application for early release. You’d also need to demonstrate you are unable to meet reasonable and immediate living expenses.

If you qualify under severe financial hardship, your superannuation fund can release a minimum of $1000 up to $10,000 per application per year. Note that early super withdrawals will incur tax on the taxable amount of your benefit of 20 per cent (plus Medicare Levy) as presumably you are under preservation age.

People who are ineligible to access funds on the basis of severe financial hardship can apply to the Department of Human Services to access their super on specified compassionate grounds. These include situations such as: preventing foreclosure on your home by a lending institution; medical treatment for yourself or your family; modifications to the family home to accommodate disability; palliative care and funeral expenses for a dependent.

Note that payments for loans, credit cards and expenses not directly related to the grounds for compassionate release are ineligible for consideration. There are no limits to the release of funds for compassionate grounds other than for mortgages that are limited to loan arrears, three months’ worth of future loan repayments and 12 months interest in advance. Tax is still payable on benefits received. Full details are available at www.humanservices.gov.au or phone [phone].

So putting it all together, unless you have been receiving government income support for at least 26 weeks, are currently receiving this income support, and have reasonable and immediate living expenses that you would be unable to meet, it is unlikely that you would be eligible to access your superannuation at this time.

Similarly, unless you satisfy the requirements for a release of superannuation funds on compassionate grounds or permanent incapacity or terminal illness, you will be unable to access $50,000 of your superannuation unless satisfying a condition of release.