COVID-19: Early release of $10,000
Many members will be affected by COVID-19 in the coming weeks and months and, for some, the pandemic will mean a loss of income and financial hardship.
The Government has relaxed the rules around early access to super if you need financial relief as a result of the disruption caused by COVID-19. A tax-free withdrawal of up to $10,000 will be available from 20 April 2020 and another $10,000 from 1 July 2020. Applications for this form of early release must be made directly through the ATO. See below for details.
TWUSUPER will keep you updated about COVID-19 and your super through our dedicated COVID-19 resource.
Eligibility for early withdrawal due to COVID-19
You will be eligible for Early Release under the new rules if you are a citizen or permanent resident of Australia and New Zealand and:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or
- on or after 1 January 2020:
- you were made redundant
- your working hours were reduced by 20% or more, or
- you are a sole trader whose business was suspended or your turnover reduced by 20% or more.
Withdrawals will be tax-free and will not affect Centrelink or Veteran's Affair's payments.
Treasury has released a detailed fact sheet outlining the process for claiming early access to super.
Important considerations before you apply
Before applying for early release, you need to check your:
- eligibility, and
- insurance cover.
You also need to consider the potential effect of a withdrawal on your retirement savings.
To apply for early release through the ATO as a result of COVID-19, you will need to self-certify with the ATO that you have lost income due to at least one of the eligibility criteria listed above. You should check your eligibility before you apply.
Your insurance cover
If you have insurance cover attached to your super account, that cover will cease if you close your account (due to withdrawing all the funds) or you no longer have a high enough balance to pay the premiums (fees). Many TWUSUPER members have automatic Death and TPD cover through their super, and some have Income Protection cover. You can check your current insurance arrangements, and your balance, by logging in to Member Online.
Your retirement outcome
It's also important to understand that spending your retirement savings early may mean that you miss out on longer-term compound interest, which could put you at greater risk of falling short when you need the money later on.
Industry Super Australia's (ISA) tool can help you quickly calculate how your final retirement pot could be reduced, depending on how old you are when you make a withdrawal and how much you withdraw.
If you're concerned about how withdrawing super early might affect your retirement balance in the years to come, you can discuss it with us. We can give general advice over the phone. Call 1800 222 071 between 9am and 5pm (AEST/AEDT weekdays). Please note that calls may take longer to answer than usual at this busy time.
How to apply for early release due to COVID-19
Since 20 April 2020, the Government has been accepting applications for early release online through myGov.
When you will receive your money
While we will aim to process your requests as soon as possible, withdrawals are generally processed within 5 to 10 working days from the date your application has been approved by the ATO.
Protect yourself from scammers
New super scams targeting Australians impacted by COVID-19 are being reported to the Government's Scamwatch
Early release applications for those affected by COVID-19 are made directly through your ATO account by logging into your MyGov account at my.gov.au. The same applies to early release requests made under compassionate grounds other than those resulting from COVID-19. There is no other way to make an application for early release due to COVID-19 or on other compassionate grounds and you don't need to engage a third party.
If you're applying for early release on the grounds of financial hardship not related to COVID-19, or due to terminal illness, please see below.
Other early release categories
Below are details of early release that could be available where the request for release does not relate to COVID-19.
In the case of severe financial hardship, compassionate grounds or terminal illness, you may be able to access your super early. To find out more call us on 1800 222 071 between 8am and 8pm (AEST/AEDT) weekdays.
Severe financial hardship
You can apply for the early release of your super on the grounds of severe financial hardship if you have:
- been receiving Commonwealth income support payments for the last 26 weeks and are unable to meet reasonable and immediate family living expenses, or
- reached your preservation age plus 39 weeks, are not gainfully employed and have been receiving Commonwealth income support payments for the last 39 weeks.
Only one payment amount can be released in each 12-month period. The payment amount is at the Trustee’s discretion having regard to the hardship circumstances supported by your application and accompanying documents, but can be no more than $10,000 before tax.
You may withdraw your super on compassionate grounds to cover the following:
- medical or dental treatment including transportation costs (for yourself or your dependants)
- losing your home because you are unable to meet mortgage repayments
- modifying your home or vehicle in the case of severe disability (for yourself or your dependants)
- paying for expenses relating to terminal illness (for yourself or your dependants)
- paying for expenses associated with a dependant’s death, funeral or burial.
You must obtain approval from the Australian Taxation Office (ATO) via the myGov website (my.gov.au) – phone the ATO on 13 10 20 for more information.
Insured members with Death cover may become eligible for benefit payments if you are diagnosed with a terminal illness.
Terminal illness benefit payments may be made tax free if each of the following conditions are met:
- two registered Medical Practitioners certify, jointly or separately, that you suffer from an illness, or have incurred an injury, that is likely to result in your death within 24 months of the certification (certification period)
- at least one of the registered Medical Practitioners is a specialist practising in an area related to the illness or injury suffered by you
- for each of the certifications, the certification period has not ended
- the Insurer is satisfied on medical or other evidence that, despite reasonable medical treatment, your illness or injury is likely to result in your death within the certification period, and
- the illness or injury that you suffer from occurs, and the date of the certifications takes place, while you are insured under the policy.