Early access to superannuation now available

Early access of up to $20,000 in tax-free superannuation is a key plank in the federal government’s COVID-19 economic survival toolkit and the scheme that offers a lifeline for those suffering from significant financial hardship is now open for access.

The scheme allows superannuation account holders to withdraw $10,000 before July 1, 2020. It is also possible to access up to a further $10,000 from July 1, 2020 to September 24, 2020 under the current guidelines.

To qualify, superannuation account holders need to either be unemployed or demonstrate that since January 1, 2020 they have had their work hours reduced by 20 per cent or have been made redundant. Sole traders need to have suspended their businesses or suffered a 20 per cent reduction in work.

Applications need to be made through the Australian Taxation Office via the MyGov website.

The early release of superannuation provision is in addition to the $130 billion JobKeeper package which provides $1,500 a fortnight per employee in wage support for businesses that have suffered a 30 per cent or more decline in revenue in March.

A number of other measures have also been announced including a mandatory code for commercial landlords, government guaranteed loans for business and increases in the asset write-off value to $150,000.

Once the application for early superannuation withdrawal has been approved, the appropriate superannuation fund will be notified with account holders to receive their money within five days.

Media Super, the industry superannuation fund for the print, media and graphic design and entertainment industries, understands this is an incredibly difficult time and that many Australians have little choice but to access their superannuation to survive the coming months.

But it cautions about the impact of an early release on superannuation balances at retirement, particularly for younger people, and has put together a series of fact sheets to aid in this difficult decision making process.

The fact sheets contain important information about how to access your superannuation should you need to but also explains the potential ramifications of the premature withdrawal of funds, using financial modelling provided by Industry Super Australia.

As an example, the fact sheet indicates that a 30-year-old with a starting balance of $40,000 would be $97,214 worse off at retirement age if they took the full $20,000 out of their account at this point.

For a 20-year-old the situation worsens to being $120,511 worse off at retirement age.

“Withdrawing $10,000 or $20,000 can have a substantial impact on your retirement savings down the track, with younger members standing to lose the most over their lifetime,” the fact sheet stated.

“Members should also consider that withdrawing super now is like selling a house at the bottom of the market – you’ll lose money you would probably claw back overtime.”

Media Super has pointed to the recent economic stimulus packages to help individuals, businesses and sole traders as a support to get through these difficult times.

“The JobSeeker payment is available to people who have lost permanent employment, sole traders and the self-employed, casual and contract workers who meet the income test,” the fact sheet identified.

“The JobKeeper payment will provide a wage subsidy to eligible businesses to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months.”

If you have any queries regarding your superannuation and the impact an early withdrawal may have on your retirement balance, please contact the Media Super helpline on 1800 640 886 or visit Media Super online here.

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