COVID-19 and early access to your super
- If you are experiencing financial stress as a result of coronavirus you may be able to access up to $10,000 of your superannuation in 2019-20 and a further $10,000 in 2020-21
- However, accessing your super now will reduce your balance at retirement by more than $20,000.
- You apply directly to the ATO for early access through the myGov website
- You can apply for early access from mid April-2020
- Once the ATO processes your application, we will let you know how you need to confirm your identity and bank account details with us
- Early access payments are tax-free
- Early access payments won’t affect Centrelink or Veterans’ Affairs payments
- Early access payments won’t change the existing ways to apply for early access to your super
Temporary early access to your super
While superannuation helps people save for retirement, the Government has recognised that for those significantly financially affected by the coronavirus, accessing some of those savings today may outweigh the benefits of maintaining those savings until retirement.
The federal government has announced that people facing financial stress as a result of the COVID-19 pandemic will be granted early access to their super. Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. If you are eligible, you will also be able to access up to a further $10,000 from 1 July 2020.
It is important to note, you cannot apply through Inspired Money directly.
Am I eligible?
To apply for early release of your super, you must satisfy one or more of the following requirements:
- You are unemployed,
- You are eligible to receive a:
- job seeker payment, or
- youth allowance for jobseekers, or
- parenting payment (including the single and partnered payments), or
- special benefit, or
- farm household allowance,
- On or after 1 January 2020, you:
- were made redundant, or
- had your working hours reduced by 20% or more, or
- are a sole trader and your business was suspended or there was a reduction in your turnover of 20% or more.
Consider the impact on your balance at retirement
If you are experiencing financial stress as a result of coronavirus, you may have a real and immediate need to access your super early in these challenging times. However, before you do, it is important to consider that $20,000 in your super now would grow to a significantly higher amount by the time you retire – because of compound interest.
Put simply, compound interest is “interest on interest”: as your super balance earns interest and grows over time, you earn interest on this higher balance. And the longer you keep earning interest on your balance, the more you will forgo by accessing your super now.
This is shown in the graph below. For example, if you are 35 years old and access $20,000 from your super today, you will forgo around $80,000 that you would have had in your super account at retirement.
*Source: Super Ratings with modelling assumptions based on ASIC’s MoneySmart calculator using a Growth option with an assumed investment return of 5.00% before fees and taxes on earnings.
Will my insurance be affected?
If your account balance reduces to $0, your insurance cover may cease if there is not enough money to pay insurance premiums. Please contact the Team @ Inspired Money for more detailed information about your specific cover.
How do I apply?
If you are eligible, you can apply online through myGov for early access to your super from mid April 2020.
Please note you cannot apply through Inspired Money directly.
What is the process?
You will need to certify that you meet the above eligibility criteria.
The ATO will let you know once they process your application.
We will let you know how you need to confirm your identity and bank account details with us.
We will then make the payment to you.
If you would like further information and guidance, please see the government’s fact sheet.