The Australian Government has recently announced that eligible individuals will be allowed early access to their superannuation due to the COVID-19 crisis. We’ve previously published some information regarding this development here.
Australians are losing their jobs, businesses are closing down and markets are dropping, causing extreme financial strain for many people.
If you are considering accessing your super due to financial stress, we have prepared the following information:
- Government is still working with the superannuation industry to determine how this will best work without causing unnecessary losses to member account balances, funds and the markets.
- The application process and assessment of eligibility is being managed completely by the ATO through the myGov website. They will then advise each fund of payments to be made. Please liaise directly with the ATO (through myGov).
- The initiative is not expected to take effect until at least mid-April. Given the current environment, many superannuation fund contact centres are experiencing high volumes, and call wait queues are abnormally long. You may find it easier to contact your superannuation fund through email or their website.
- As an Intrust Super member, you can log into MemberAccess to view your information. Please ensure your personal details, including your address, email and phone number, are up to date. If you’re unsure how to register, we have a guide here.
- Uncertainty creates opportunity for fraudsters. Fraud attempts based on the early access scheme are already starting to emerge. Please be wary of any unsolicited calls, messages or emails from people offering to help you withdraw your super.
- To combat this threat, superannuation funds have in place measures to prevent theft of members’ money. This may increase in the current environment so members should be aware they may be required to provide additional levels of identification as part of the early withdrawal process.
- Times are extremely difficult. Federal and local government^ has responded by releasing economic relief packages that include individual worker and industry support, payroll tax relief (including refunds and tax holidays for small and large businesses) and rebates for householders to offset the costs of water and electricity. Changes have also been made to facilitate speedier access to Centrelink payments such as Parenting, JobSeeker and Youth Allowance payments with significantly reduced waiting periods. It’s useful at this time to work out what your needs are in the short and longer term and consider the range of options available.
- Some members may need to resort to accessing their superannuation account before retirement. Unlike accessing income, offsets or refunds from government, the impact of accessing your superannuation account balance is often far reaching. With markets at low values, withdrawing investments now will potentially lock in losses – which are incredibly hard to recover from, making a comfortable retirement that much further away or less likely. We have included a graph produced by independent research house, SuperRatings, that illustrates the effects the withdrawal of super could have on a retirement balance.
This information is intended to be general in nature, so if you need financial advice, please contact our Intrust360° advisers by calling 1300 001 360 or see our website.
Impact of super withdrawals on future balances*
$20,000 withdrawn from super by a 26-year-old ($10,000 in this financial year and $10,000 in 2020/21) could have grown to more than $130,000 by the time they retire.
Assumptions: based on ASIC’s MoneySmart calculator using a Growth option with an assumed investment return of 5.0% before fees and taxes on earnings.
Please also listen to this interview the ABC conducted with Martin Fahy, CEO of ASFA on the topic of early accessing superannuation.
We wish you and your families all the best during this difficult period. Please do not hesitate to contact us for further information.