Superannuation

Many people have concerns about superannuation.

Learn more about:

• When you can access super
• How to access super early
• Insurance through super
• Super, insurance and terminal illness

When you can access super

In Australia, you usually need to be at least 55 years old and retired before you can access your superannuation (super). You can, however, access your super early in particular circumstances, such as to pay for medical treatment or due to severe financial hardship.

Aged 65 or over, or aged 55–64 and retired – Once you have reached the minimum age set by law (your preservation age), you can access your super as a lump sum or an income stream.

Aged 55–64 and still working – Once you have reached your preservation age, you can access your super as an income stream to top up your salary, but you cannot access it as a lump sum. You can receive a maximum of 10% of your super account balance each year as a “transition to retirement” income stream. When you are under age 60, tax may apply to the income payments.

Aged under 55 – You can access your super early only in some circumstances, including if you:

• need the money to pay for medical treatment, or transport to and from medical treatment for yourself or a dependant
• need the money for home loan repayments to prevent the bank from selling your house to pay off the debt (foreclosure)
• have to make changes to your home for your disability
• need to pay palliative care, funeral, burial or cremation costs
• have a terminal illness with a life expectancy of two years or less
• are unable to ever return to work (permanent incapacity)
• have been receiving a Centrelink payment for 26 weeks continuously and cannot pay your living expenses.

I was embarrassed talking about my financial position. The washing machine broke down and I had to use some of my superannuation funds to pay for it. I still feel embarrassed to ask for help.

Sandra

How to access super early

To access your superannuation early, you need to apply to the Australian Taxation Office (ATO) or directly to your super fund, depending on why you are applying. There are also tax issues to consider.

To find out more, visit ato.gov.au, contact your super fund or talk to a financial counsellor, or download our Superannuation and cancer fact sheet.

Super, insurance and terminal illness

People accessing super early because of a terminal illness might also be able to claim on their super’s life insurance (see above). Before you decide to access your super early, find out whether doing so would affect your insurance entitlements.

Premiums for life insurance are often deducted directly from the super’s lump sum (preserved amount). If you withdraw all your super, you will no longer be up to date with the insurance premiums, so your insurance cover may be cancelled and you might not be able to make a claim. You may be able to leave some of your super in the fund so the insurance premiums continue to be paid.

You also need to check the qualifying time frame – superannuation law allows people to withdraw all their super if their life expectancy is two years or less, but many life insurance policies allow payouts only when life expectancy is one year or less.

To find out more, talk to your super fund or to a financial adviser.

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