As of 20 April 2020, people affected by the COVID-19 pandemic may be eligible to apply to access up to $10,000 of their super in FY 2019-20 and a further $10,000 in FY 2020-21.
ARE YOU ELIGIBLE?
You can apply to access your super if you meet one or more of the following requirements:
- you are unemployed
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment [which includes the single and partnered payments], special benefit or farm household allowance
- on or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20 per cent or more
- If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more
If you meet these requirements and decide to withdraw super, you won’t pay tax on super you withdraw. It won’t affect Centrelink or Veterans’ Affairs payments.
HOW DO YOU WITHDRAW SOME OF YOUR SUPER?
You can register your interest today through myGov. Applications open 20 April 2020.
People who are eligible will be able to apply online [through myGov] to access up to $10,000 of their super between 20 April and 30 June 2020. Applications to access up to a further $10,000 will be open from 1 July until 24 September 2020.
ASSESS ALL OF YOUR OPTIONS FIRST
Before you withdraw super, it’s important to assess all of the options available to you. Access Government assistance and talk to your bank or lender about how they can help.
GOVERNMENT PAYMENTS
As part of the COVID-19 response, there are specific Government payments to help you:
- Income support payments – crisis payments and a temporary fortnightly $550 coronavirus supplement
- Household support payments – two automatic $750 Economic Support Payments
- JobKeeper Payment – $1,500 a fortnight for 6 months may be available to employers to keep paying eligible employees whose hours have been reduced
CONTACT YOUR BANK
All banks and lenders have hardship teams ready to help customers in tough times.
You may be able change the terms of your loan, or temporarily pause or reduce your repayments for 6 months.
CHECK YOUR CURRENT SUPER BALANCE + CONSIDER THE IMPACTS ON YOUR INSURANCE
Your super balance as displayed through myGov may be as at 30 June 2019. Your super balance may have changed since then, so it’s a good idea to check your current balance by getting in contact with your super fund.
It’s also important to consider the impacts that withdrawing some of your super may have on your insurance. More than 70% of Australians that have life insurance hold it through super. If your super balance falls to zero or is too low, you may lose your life and income protection cover.
CONSIDER THE IMPACT ON YOUR RETIREMENT SAVINGS
At a time when you may be struggling to cover basic costs such as rent, groceries and utility bills, a payment of $10,000 or even $20,000 could be a very welcome injection of cash. However, it’s important to remember that withdrawing some of your super has the potential to make a significant difference to your level of income in retirement.
Your super is your retirement savings. Consider what impact withdrawing super today will have on your retirement by using the simple superannuation calculator available on the moneysmart.gov.au website to work out how much super you’ll have when you retire.
According to Ben Marshan, Head of Policy and Standards at the Financial Planning Association of Australia [FPA], “Conservatively, every $1,000 that you have in super at age 30 will be worth about $4,500 at age 60. If you take $1,000 out now, you have to put in $4,500 over the next 30 years to get back to the same position. Financially, for a lot of people that can be a massive struggle and they’ll never actually catch up.”
WE ARE HERE TO HELP
If you need assistance, our financial advisers at Canny Group are available to help you navigate these changes and discuss your current financial situation, superannuation and retirement savings in more detail.
