Accessing Superannuation Before Time
With many Australians are under significant financial pressure due to the worsening economic climate, people are now considering all avenues to get some sort of release in the downturn. One issue which may be considered is the prospect of accessing some of your superannuation to prop up your finances. The Australian Prudential Regulation Authority (APRA) administers the Government legislation that permits the early release of superannuation under ‘specified compassionate grounds’. These grounds are set out in the Superannuation Industry (Supervision) Act 1993, regulation 6.19A.
Although APRA must be satisfied that your application meets the criteria for early release of superannuation under specified compassionate grounds, the final decision rests with the trustee of your superannuation fund. As a first step, you should contact your superannuation fund to make sure it will allow the early release of your superannuation benefits. Regardless of APRA’s approval you will not be able to access your benefits if your fund does not allow the early release of superannuation. It is up to your superannuation fund trustee (or RSA provider) to decide what benefits they will and will not release. Further, the superannuation fund trustee/RSA provider may also charge you fees for the early release of your superannuation. This seems very strange in that although APRA has guidelines in place, superannuation funds don’t have to allow early access to super. It makes it important that when choosing a superannuation fund that you choose one which allows flexibility in times of need!
The first step in trying to access your super is to make contact with your Fund, if your fund does indeed release funds – you will need to comply with the requirements of APRA. There are a limited number of circumstances in which your superannuation can be released early. The reasons for early release of superannuation are called ‘grounds’. Different grounds fall under the responsibility of different organizations. An overview of the “grounds” and relevant responsibilities follows:-
APRA
APRA may give approval for the release of superannuation funds if you need the money to:
1. Pay for medical or dental expenses, for you or a dependant of yours;
2. Pay for transport to medical or dental treatment, for you or a dependant of yours;
3. Prevent your home from being sold by your financial lender which holds the mortgage;
4. Modify your home or vehicle to accommodate your own needs, or the needs of a dependant, in the case of severe disability;
5. Pay for expenses associated with caring for a person with a terminal medical condition (i.e. palliative care), be it for yourself or a dependant; or
6. Pay for expenses associated with a dependant’s death, funeral or burial.
You should be aware that “specified compassionate grounds” generally do not include payments against vehicles, utilities, credit cards or other personal debt are not “specified compassionate grounds”. If your situation falls into one of the above scenarios, you will need to complete the application form provided by APRA or available on the website. You will then need to provide detailed evidence to support your claims. The application form details the types of evidence necessary. Examples of necessary evidence however will alter depending on the circumstances under which you are applying for the early release of your benefit but can include medical certificates, supporting letters from your doctor, supporting letters from your financial institution, details to validate your financial position etc. When you apply to APRA for permission to access your benefits, their staff will assess your application and decide whether your situation fits within what’s allowed by the law. Essentially though, APRA staff generally cannot exercise any discretion or make special allowance for early release, whether they would personally like to or not.
Trustee/Provider
Your Trustee/Provider may allow access if you:
1. Are experiencing severe financial hardship;
2. Have been permanently incapacitated (permanent and total disability);
3. Are terminally ill; or
4. Have a preserved benefits balance of $200 or less.
Again an application will need to be made accompanied by supporting evidence. However, if you are terminally ill, you can access all of your benefits tax free.
ATO
If you were in Australia temporarily and are now leaving the country for good, you can apply to the Australian Taxation Office (ATO) for early release of benefits. You may also be able to access your super early if you have funds in a Superannuation Holding Account Reserve (SHAR) and are experiencing severe financial hardship.
Centre link
If you have been receiving an eligible income support payment from Centrelink, you may be able to apply direct to your superannuation fund/RSA for early release.
The Superannuation Fund and APRA will not simply allow you to access your benefit unless you can categorically prove that your circumstances are dire and meet the intentions of the legislation – so you must prove beyond doubt that access to the benefit is absolutely essential. Prepare your case carefully and thoroughly and provide supporting documentation.
These harsh financial times are going to affect thousands of Australians – accessing your superannuation early maybe the one avenue that keeps your head above water.
About author
Harrison Paspalis is an experienced financial advisor who is writing article on superannuation fund and other financial matters. According to him, australian superannuation is a plan and program which should be worth noticing.
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