News

Early access to super due to COVID-19

COVID

26/03/2020

As part of its economic response to the coronavirus, the Federal Government has recently announced a number of temporary measures to provide relief for those experiencing financial hardship.

While super is designed to help people save for retirement, for those impacted by the coronavirus outbreak, accessing some of their super today may outweigh the benefits of preserving those savings until retirement.

We outline the Government’s proposed changes to superannuation and retirement arrangements.

1. Temporary early release of super

From mid-April 2020, those impacted by COVID-19 will be able to apply for early release of their super. Eligible individuals can access up to $10,000 in the 2019-20 financial year and a further $10,000 in 2020-21, for approximately three months only, with exact timing to be legislated.

To be eligible, you must satisfy one or more of the following requirements:

  • You are unemployed; or
  • You are eligible to receive a job seeker payment, youth allowance for job seekers, parenting payment (including single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020:
    • you were made redundant; or
    • your working hours were reduced by 20 per cent or more; or
    • if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more.

People accessing their super through this temporary early release arrangement will not need to pay tax on the amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

How to apply

If you are eligible for this new ground of early release, you can apply directly to the Australian Taxation Office (ATO) through the myGov website at www.my.gov.au . You will need to certify that you meet the above eligibility requirements.

Upon processing your application, the ATO will issue you with a determination and provide a copy of this determination to VISSF, advising us to release your super payment to you. We encourage you to check that we have all your current personal details, including your contact and bank account details. Before we pay your benefit, you will need to provide proof of your identity.

2. Temporary reduction in minimum drawdown requirements

For the 2019-20 and 2020-21 financial years, the minimum drawdown requirements for account based pensions will be temporarily reduced by 50 per cent. This change will benefit retirees with account based pensions by reducing their need to sell investment assets to fund the minimum drawdown requirements.

3. Social security deeming rates

The Government is reducing the upper and lower social security deeming rates by a further 0.25 percentage points on top of the 0.50 percentage point reduction, as announced on 12 March 2020.

The changes to deeming rates will be effective from 1 May 2020 and will mean an upper deeming rate of 2.25 per cent and lower deeming rate set at 0.25 per cent.

Once again, people accessing their super through this temporary early release arrangement will not need to pay tax on the amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

Need more help?

These new measures are likely to raise a number of questions for members. We have put together some FAQs to help you understand the changes. Click the link below to read more.

COVID-19 Early Access FAQs

For more information on the Australian Government’s Economic Response to the COVID-19 visit treasury.gov.au/coronavirusOpens in new window .

Find & combine

Consolidating your super into one account makes your money work harder because you save on paying multiple sets of fees.

Learn more