Early release of super explained

Early release of super for severe financial hardship

If you're experiencing severe financial hardship, you may be allowed to access some of your super funds earlier than usual. Eligibility for access due to severe financial hardship depends on your age in relation to your preservation age.¹

To be eligible (prior to your preservation age), you'll need to:

• currently (and for the last 26 consecutive weeks) be receiving income support payments from Centrelink or the Department of Veteran's Affairs (DVA)
• be unable to meet reasonable and immediate living expenses
• have substantial evidence of your debts or unpayable expenses.

The application process may differ between super funds. If you're applying with NGS, you'll need to complete our Early release of superannuation benefits on grounds of severe financial hardship form.

When applying, you'll need to provide:

• your Centrelink customer reference number (CRN)
• certified proof of your identity (ID)
• proof of your current weekly income and expenses — no more than one month old — relating to yourself, your partner and your dependants
• proof of outstanding debts, like copies of overdue notices or bills no more than one month old
• a signed statutory declaration
• an explanation of how your current circumstances are impacted due to severe financial hardship.

Bear in mind that the funds taken out of your super early are paid and taxed as a normal super lump sum payout. You'll be generally taxed at a rate depending on your age, income, and the components of your super lump sum.

Early release of super on compassionate grounds

If you have a terminal illness or permanent incapacity, you may be able to access your super early on compassionate grounds.

In some cases, you can also withdraw your super early to pay for your dependant's expenses. For early access on compassionate grounds, a person is considered your dependant if they are your spouse, child, a person you are in an interdependent relationship with, or a person who is financially dependent on you.

The ATO has clear limitations for those wanting to access super early under compassionate grounds. Conditions for access for medical treatment and transport, disability, and home sale prevention are outlined on the ATO website. This option is designed to help pay for:

• medical treatment and transport for you or a dependant
• a home loan or council rate payment so you don't lose your home
• modification in your home or vehicle to accommodate you or your dependant's severe disability
• palliative care for you or a dependant with a terminal illness
• burial or funeral expenses for a dependant.

Unlike severe financial hardship payments, the release of super on compassionate grounds is processed by the Australian Taxation Office (ATO), and applications can be submitted through myGov or via a paper form on request.

If you’re considering accessing super early on compassionate grounds, there are a few conditions outlined by the ATO that you need to meet.

You must:

• not have paid for your expenses yet (you can't access your super early to offset what you've already spent)
• be unable to afford part or all of the expense without early access to super (i.e. you're not in a position to get a loan, use your savings, or sell your assets)
• be a citizen or permanent resident of Australia or New Zealand
• provide all the required supporting evidence of your unpaid expenses (e.g. invoices and quotes detailing specific bills and family living expenses).

Early access to super on compassionate grounds applies only for any unpaid expenses you may have. And, unlike early access under financial hardship, applying on compassionate grounds means you can only withdraw an amount deemed appropriate by the ATO to meet your unpaid expenses.

Note that there are different regulations surrounding early access to super between the states and territories in some cases based on the type of fund you are in. This does not apply to NGS. A Super Specialist may help you determine how you can gain early access to your super based on your location.

First home super saver scheme

The first home super saver (FHSS) scheme allows you to make and later withdraw concessional (before-tax) and non-concessional (after-tax) contributions into your super to help you purchase your first home.

Under this scheme, you can release part of the funds from your super to pay for your first home, even if you are under preservation age. If you're successful in applying for the FHSS scheme, you can release a maximum of $15,000 of your voluntary super contributions from any one financial year or up to $50,000 in contributions across all years. This means couples can potentially access up to $100,000 for the purchase of their first home.

Note that to apply for early release of your funds under the FHSS scheme, you will need to live in the property you buy (or intend to) for at least 6 of the first 12 months you own it.

For more details on how the scheme works, visit our FHSS scheme page.

The information provided is general information only and does not take into account your personal objectives, financial situation or needs. Before acting on this information or making an investment decision, you should consider your personal circumstances and read our Product Disclosure Statement and Target Market Determinations for more information. You should also consider obtaining financial, taxation and/or legal advice which is tailored to your personal circumstances before making a decision.

Call us on 1300 133 177 if you would like to speak with us further, or you can discuss matters with one of our NGS Super Specialists, or an NGS Financial Planner.