How super could be used to help fire and drought victims

‘This is their money they have worked hard to accumulate, and in some cases – if not most – may be all that they have left.’

Piggy bank on fire

Australians affected by devastating bushfires and farmers affected by drought should be allowed early access to super assets to help them through trying times, say some financial experts.

According to the Australian Tax Office (ATO), there are very limited circumstances where you can access your superannuation early, most of which are related to specific medical conditions or severe financial hardship.

Rural SMSF holders could potentially access super assets to help with financial hardship as a result of the current drought or property destruction caused by bushfires, says Practical Systems Super SMSF specialist Bob Locke, whose group had recently seen a rising incidence of such requests for early access to super from clients experiencing hardship.

He told SMSF Adviser that even though there are strict rules around accessing super prior to retirement age, if rural clients could prove severe financial hardship it may be possible to access a portion of super to supplement any emergency payments already being received.

“Super legislation recognises that there can be legitimate situations where release of monies before the intended time may be appropriate,” he said.

“These include compassionate grounds to cover items such as medical expenses, home modifications to cater for disability and housing loan payments to prevent foreclosure; severe financial hardship for amounts up to $10,000 in any year; [and] transition to retirement provided the person has reached their preservation age.

“As an example, farmers who may have been receiving the Farm Household Allowance benefit for at least six months may qualify for severe financial hardship.”

Starting a transition to retirement pension could also be an option to help rural clients through hardship.

“One option for them might be to instigate a transition to retirement payment from their fund to temporarily assist with living expenses until the drought breaks. The intention would be to top up their super balances once conditions return to normal,” he said.

Infocus head of advice George Kovanis also believes the government should consider allowing early access to super for bushfire-affected Australians.

“This is their money they have worked hard to accumulate, and in some cases – if not most – may be all that they have left,” Mr Kovanis penned in a message to the prime minister.

“This is one piece of policy that would receive bipartisan support and that of the community; it would ease the immediate financial burden and would provide some sort of buffer for those who need it most.”

Do you think farmers and bushfire victims should be allowed early access to their super?

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    COMMENTS

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    john
    8th Jan 2020
    9:53am
    Why do we always fall back to the super could help this situation, when the government should be helping this situation.
    Here we are talking about a savings of money for the future where by it can be used for people when they no longer work, superannuation is a fail-safe, if you are in a disaster not your fault and a victim, then you should be covered by insurance or government-guaranteed financial help, so many times you read this comment can we grab our super early, why people ask this question is beyond me. I guess its because the after retirement set up for so many Australians is simply not enough, and the government and welfare should be able to help and guarantee pensions that are reasonable and the over flow is super, gives people money to spend.That is what it is for.
    Getting back to bushfire victims if they are 25 years from retirement why would they need to delve into their later in life survival fund.
    Really this suggestion shows our government really thinks along the lines we'll do just so much, then if it gets worse, use your own money and if that doesn't work "tough Luck"
    This government that we all thought would be a wake up govt, is an on the hands sitter.
    Can you believe in fire torn Australia which happens every year, we just didn't prepare properly,thick uncleared under growth that carries the fire to catastrophe levels, floods fires and sunshine, dry bushland and we didn't prepare! Who the hell is running this country, and the opposition is non-existant!
    Anonymous
    8th Jan 2020
    10:18am
    Why should the government help when they fail to take out insurance?
    sunnyOz
    8th Jan 2020
    10:47am
    VCBB - totally agree. That is what insurance is for. What? - get to point where people say - "I want to live in a place covered in trees, and don't want to pay for insurance. Why bother paying when the govt will help us out if there is a disaster?" Grossly unfair to those who struggle to actually pay their insurance. I am solely on the pension, but reassessing and paying my insurance every year is a major priority. Why should I be penalised for being responsible, and others rewarded for bludging?
    I lived through the 1983 Victorian bushfires and NEVER want to experience anything like that again. My family farm was safe, only loosing back paddocks and a hay shed. But I saw so many of my neighbors utterly ruined because they either did not have insurance, or had insufficient insurance. The govt (ie - tax payer) should NOT be seen as a backup for people who don't take out insurance. As it is, now all our premiums will sky rocket. When I moved to Qld, I deliberately looked for a place that had minimum exposure to fires, flood and other disasters - but I still get get charged high premiums based on 'world disaster exposure & history'.
    KSS
    8th Jan 2020
    1:43pm
    john: "Really this suggestion shows our government really thinks along the lines we'll do just so much, then if it gets worse, use your own money and if that doesn't work "tough Luck" This government that we all thought would be a wake up govt, is an on the hands sitter."



    Really john, please! This Bob Locke is a Practical Systems Super SMSF specialist - not a Government representative, a Government department or even an elected representative, never mind a Government spokesman. This is NOT a Government initiative! Stop blaming the Government for everything.
    JB
    8th Jan 2020
    11:03am
    These poor people are going to need any help they can get ! Their lives have been ripped apart . We dont know who had insurance or not enough insurance. Totally irrelevant! They need help now . Lives are shattered and this tragic disaster will take a long time to repair . Let’s give them compassion and empathy
    Anonymous
    8th Jan 2020
    11:21am
    How fair is it to give assistance to those without insurance but no assistance to those with insurance?
    Rosret
    8th Jan 2020
    11:47am
    This an absolutely devastating event. $35m has just been donated from overseas. I would like to remind everyone that the drought has been going for 3 years now. We have had the biggest cull of livestock in Australia's history. Farmers are broken physically and mentally.

    Before you go off on all your political hate posts would please think of all the farmers, the businesses and so so many animals and show some respect.

    If you are going to donate - please help the drought fund as well.
    JB
    8th Jan 2020
    11:58am
    Totally agree Rosret
    cirdan
    8th Jan 2020
    2:26pm
    I also agree with Rosret and JB. Everyone in an ideal world should have home and contents insurance but if those who don't don't get some financial assistance, would some people here, prefer they're put out on the street with welfare for the next few years ? The people who are facing severe hardship should be able to access their own super. If they can't then it's going to cost the taxpayer in welfare support and most likely social and mental health support.
    KSS
    8th Jan 2020
    1:36pm
    Absolutely not!

    First we had a demand for access for buying houses, then for any number of medical cconditions (many temporary) now for fire relief. The answer is No, No and NO!

    Super is for funding retirement. Not a get-out-of-jail card to be drawn on at will. There are other avenues for relief (such as home and content insurance, income protection insurance and the like) plus there are a number of Government initiatives and hardship payments being made available.

    leave super alone. We already know that many poeple will not have enough to cover their lifetime so why this incessent demand to withdraw it at every life challenge?
    cirdan
    8th Jan 2020
    2:22pm
    You think they should end up on welfare instead?
    Blossom
    8th Jan 2020
    3:16pm
    Good Luck in succeeding getting money out of your super when you have to provide proof of financial hardship.He had to fill out several forms, not just one lot. I Know somebody who was in the unfortunate situation and had to do that or he would have lost his family home and family business because a customer owed him $9,000.00 + interest as granted in court after trying to negotiate payment via a Lawyer. There was proof that the customer was in a financial position to pay the account when it was due. It took so long that he nearly went bankrupt waiting for payment from his super
    Blossom
    8th Jan 2020
    3:16pm
    Good Luck in succeeding getting money out of your super when you have to provide proof of financial hardship.He had to fill out several forms, not just one lot. I Know somebody who was in the unfortunate situation and had to do that or he would have lost his family home and family business because a customer owed him $9,000.00 + interest as granted in court after trying to negotiate payment via a Lawyer. There was proof that the customer was in a financial position to pay the account when it was due. It took so long that he nearly went bankrupt waiting for payment from his super
    Blossom
    24th Jan 2020
    11:32am
    If you have funds in Superannuation and can prove financial hardship you are entitled to request withdraw funds from it. You probably have to fill in a few forms though (and you may not receive all of them at the same time). You may not get the funds for several weeks. I know somebody who had to apply to save his house and business. Not sure how long they took to release the funds to him.
    Blossom
    24th Jan 2020
    11:32am
    If you have funds in Superannuation and can prove financial hardship you are entitled to request withdraw funds from it. You probably have to fill in a few forms though (and you may not receive all of them at the same time). You may not get the funds for several weeks. I know somebody who had to apply to save his house and business. Not sure how long they took to release the funds to him.


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