Accessing Your Superannuation During COVID-19
In response to the economic impact of COVID-19, the government has made it possible for some people in specific circumstances to access their superannuation early. If your situation fits, you may be able to lean on your super as an additional source of income during the pandemic, though this should really only be considered if other options aren’t available to you.
If you’re eligible and decide to proceed with this route, you can access up to $10,000 prior to June 30 and up to $10,000 between July 1 and September 24. These payments won’t be taxed and don’t need to be included in your tax return.
Why You Might Need Early Access to Your Super
COVID-19 and the various restrictions put in place have wreaked havoc on the Australian economy. For example, many businesses have closed either temporarily or permanently and, as a result, many people have lost their jobs or are working reduced hours (with reduced pay).
If these circumstances have left you unemployed or with significantly less take-home pay each fortnight, you may need to look for other ways to support yourself financially. Accessing your super early is one option that might be open to you.
Am I eligible to access my super early?
If you’re an Australian or New Zealand citizen or permanent resident, you’ll need to meet at least one of these criteria to be eligible for early super access:
- You’re unemployed
- You’re eligible for one of the relevant Centrelink allowances (i.e. JobSeeker, Youth Allowance for jobseekers, Parenting Payment, Special Benefit, or Farm Household Payment)
- You’ve been made redundant or had your hours reduced by 20% or more since the start of the year
- You’re a sole trader and you’ve suspended your business or had a turnover reduction of 20% or more.
Some temporary residents are also eligible. You might be able to access some of your superannuation if:
- You’ve held a student visa for over a year and you can’t afford your immediate living costs
- You have a temporary skilled work visa and your working hours have been cut to zero (but you’re still engaged with your employer)
- You have a temporary resident visa and you can’t afford your immediate living costs.
Are there any downsides to accessing my super early?
While it may seem like a fast fix, you shouldn’t be too quick to take advantage of the early access super scheme. Doing so could have a negative impact on your retirement. And because super balances have fallen significantly in recent months, now isn’t the best time to take money out.
It’s also worth noting that taking a lump sum from your superannuation account will reduce the amount of interest your account accrues over time. The $10,000 or $20,000 you take out now could short-change you much more than that amount when you retire.
It’s a good idea to speak with a financial advisor before accessing your superannuation. Consider relying on the government’s other packages instead. If the amount you require is only small (up to $1,000), a short-term loan might be all you need to get by.