We receive various requests regarding superannuation, and many are in the area of release of superannuation. We wouldn’t suggest you go down this route of trying to access your super early, but if you must, there are a few criteria you will need to meet in order to make this option viable.
It’s not an easy road, and the fees associated with it might give a less than desirable outcome. Unfortunately, many have needed to access their super early under the financial hardship clause, so we thought we would give some general guidelines for you in case you are looking at this option.
Severe financial hardship
Whether or not a person can release super funds under the severe financial hardship definition is determined by the super fund
trustee. The trustee will assess the claim based on one of two tests.
Test 1
Based on written evidence provided by a Commonwealth department or agency (eg Centrelink):
• the person has received Commonwealth income support payments for a continuous period of at least 26 weeks
• the person was in receipt of those payments at the time of application, and
• the person is unable to meet reasonable and immediate family living expenses.
APRA have issued guidance to super trustees with regard to what “reasonable and immediate family living expenses” are
however it is still up to the trustee to make a decision based on the person providing evidence that their basic, everyday living
expenses cannot be met.
Test 2
• Person has reached preservation age plus 39 weeks.
• Based on written evidence provided by a Commonwealth department or agency, the person has received Commonwealth
income support payments for a cumulative period of 39 weeks after the person has reached their preservation age.
• The person is not gainfully employed on either a part-time or a full-time basis on the date of the application.
As can be seen, the requirements under Test 2 do not include a need for the person to prove they are unable to meet
immediate family living expenses.
Cashing restrictions
There are restrictions on how much superannuation can be accessed under the severe financial hardship provisions as follows:
For those under age 55 (preservation age) – the amount released from super in each 12-month period must be a single lump
sum not less than $1,000 and not more than $10,000, and
For those aged 55 or over – there are no cashing restrictions. 100% of the person’s superannuation account can become
unrestricted non-preserved funds.
Case Study
Lynette is 57 and has been in receipt of a NewStart Allowance for over 12 months. She would like to work again and is actively
looking for employment. Lynette has a sizeable cash reserve which she uses along with her the NewStart Allowance to
meet her living expenses however would like to access some of her preserved superannuation funds to discharge her home
mortgage.
Can she access her super under severe financial hardship grounds to discharge her mortgage? Note: the retirement condition of
release is not available to her as she is not permanently retired from the workforce.
Yes. Lynette meets test 2. She has been receiving income support for more than 39 weeks since reaching 55 and she is not
currently employed on a full-time or part-time basis. She can access all of her superannuation benefits