11th Jun 2015
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Aussies accessing super early
Aussies accessing super early

The number of Australians being granted approval for early access to their superannuation is increasing – and so is the amount of money that they’re withdrawing.

New Department of Human Services’ (DHS) data shows that, so far this financial year, 11,700 of the 16,000 applications for early access to superannuation have been approved. The total amount released so far this year is around $148 million.

The approval rate of 73 per cent in 2014–15 compares to a 63 per cent rate in 2013–14. The amount of money individual applicants have received has risen from around $12,300 to $12,600.

In most cases, fund members can only be given premature access their super if they satisfy certain conditions of release, such as reaching retirement age (or deciding to retire earlier than age 65), severe financial hardship, compassionate grounds, being diagnosed with a terminal illness, being temporarily incapacitated, being a non-resident wishing to leave Australia permanently, or deciding to take benefits as a lifetime pension or annuity.

Applications are reviewed by either the DHS or the applicant’s super fund, depending upon their circumstances. If members qualify, depending upon the specific rules of their super fund, their benefits can be accessed. However, there are some super funds that will not permit early access for conditions such as financial hardship or on compassionate grounds.

According to Australian Institute of Superannuation Trustees’ (AIST) CEO Tom Garcia, there are strict regulations and safeguards in place when it comes to people being able to access their superannuation early. 

“It is important to understand that early release is limited to certain purposes and financial amounts – strict criteria applies to make sure the decision is in the member’s long term best interests,” said Mr Garcia.

It is generally accepted that accessing super early should be thought through very carefully.

“It depends on the person’s circumstances ... it may lead them to be worse off,” says Financial Counselling Australia’s Executive Director Fiona Guthrie. “They may have lost access to their funds meant to be used for retirement, you should get some advice and think it through clearly.”

Read more at www.news.com.au

Opinion: Aussies rolling the dice

It goes without saying that the decision to access superannuation benefits early is one that should not be taken lightly. It’s a gamble, to say the least. With the expected lifespan of most Australians increasing year after year, one could surmise that this trend may be more a case of coping with current financial hardship over poor health. That’s purely speculation though.

Maybe Australians are just being sceptical of what will happen with their superannuation savings over the coming years?

Will tax on super increase? Will the amount of tax that may need to be paid in the future outweigh the returns on those savings? Or are Australians getting wise to the fact that if they cash in a portion of their super now they may be in a more favourable position to qualify for an Age Pension?

It is likely that these are the types of questions in the minds of many Australians when it comes to making decisions about accessing their super early.

Once those ‘up on high’ make some concrete decisions on how retirement incomes will be treated in the future, it may remove the speculation about superannuation and Age Pension issues, allowing us to make informed decisions that will benefit retirees both in the short term as well as in the long run.

Currently, there are no guarantees on how best to fund retirement. Some financial advisors are saying to invest saving in property, yet the controversial housing ‘bubble’ suggests that this is a risky strategy. But will super fund members be taxed at a higher rate if they hang on to their savings in the meantime?

Retirement income planning remains complex and confusing, leaving many Australians in limbo. Until the government makes it clear how best to fund retirement in the future, it seems Aussies will continue to roll the dice.

What about you? Have you needed to access your superannuation benefits early? What reasons would make you do so? Do you feel that superannuation access should be made easier? Or do you believe that tough restrictions on access are warranted in order to safeguard the future of retired Australians?





    COMMENTS

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    worker
    11th Jun 2015
    10:12am
    the individual owns his/her superannuation not the peoples government therefore its up to the individual how they use their superannuation .However , the individual if a Australian citizen do have the right to determine how their employees MP can use the superannuation given to then as well as removal of the life time pensions and or perks MP continue to get after leaving parliament or the job as MP.
    MICK
    11th Jun 2015
    11:53am
    True only in theory worker.
    Governments of all persuasion have been wanting to get their grubby hands on the huge superannuation nest egg for years and they keep nibbling away at the edges. There is a move currently underway to nationalise superannuation, written about extensively by financial advisor Kris Sayce, and I can understand that many people are concerned about where this is all heading.
    Personally I'd be thinking that governments will replace the current pension scheme with superannuation savings pool, which is enormous. The need to do this does not exist and if governments addressed the welfare bill and ended the 'age of abusing the system' then there would be no need to attack the savings of the nation.
    I took my super and ran a few years ago. Whilst my returns are not flash I at least have some control and this appeals to me as I do not trust our governments.
    marls
    11th Jun 2015
    5:04pm
    worker i totally agree with you for me to have super i had to pay for it out of my money and my children and i went without. i went overseas to visit family at the age of 63 because i never had the money and my children were raised on second hand clothing
    Anonymous
    12th Jun 2015
    5:10pm
    What angers me is that the Government wants us to save in super, and not draw, but they victimize those who do that. Tightening the means test is an economically stupid move. It declares saving futile. It lets the wealthy escape any obligation to contribute to fixing the national debt, and gives more to those who have little, but it attacks the savers who achieved a moderate amount but not enough to be self-sufficient, forcing them to either suffer ongoing loss or reduce their asset balance. Many will simply draw on super and spend in order to re-qualify for the pension, and why not? There just isn't any benefit in keeping the money for later when the Government attacks savers the way it does.

    The proposal to tax income in retirement above a generous threshold is much more economically sensible and sustainable, fairer, and more likely to yield income for the government on an ongoing basis. I don't like the idea of any change to retirement incomes, but a moderate tax on income is far fairer and more sensible than attacking the savings of a small group with moderate assets.
    Pass the Ductape
    11th Jun 2015
    10:47am
    I'm at a stage in life when I require a series of surgeries for skin cancers. As I have no private health cover, I will likely have to delve into my super - such as it is,or what's left of it - to pay for all the upcoming procedures.

    I'm wondering how this is going to affect the aged pension I receive as I begin to withdraw the required amounts.
    Peterrj
    11th Jun 2015
    2:44pm
    Hi Ductape. I can answer your question with out any doubt with my precise answer. Q 'How will it affect your aged pension as you withdraw money from your Super Fund?' LOL, you either get the same amount or MORE Aged Pension in your pocket!!! Is it any wonder why those who have saved for their retirement are now cashing in your Super money to bite the Magic Pudding: Live the life of Riley and get paid more pension money or get the same amount. And if you are on the aged pension you can double dip and get various welfare payments thanks to the suckers who have paid taxes and saved all their lives for 'their' retirement. Anyone doubt my maths???
    Patriot
    11th Jun 2015
    6:20pm
    Ductape
    At the bottom of this page is a link(s) with a "Story I'll refer to".
    A guy by the name of Bevan Potter was selling this ointment in his health store and a chick in Bundaberg (I think) HAD a website showing the progress to HER multitude of skin cancers & how the were healed by this ointment.
    Bevan was taken to task by the Theraputic Goods Administration (TGA) and taken to court whilst it is alleged that the Bundaberg website was forced to be closed via much intimidation.
    Bevan was extremely lucky that his court case was precided over by a benevolent magistrate who applied Common Law to the case rather than - as is customary currently - Maritime Law.
    Whilst Bevan got off light in court, the Lawyer fees etc broke him financially I believe.

    Whilst Cansema CANNOT be marketed in Australia, the individual components are NOT ILLEGAL and freely available in Australia.
    The link provides the formula & how to make it!

    It is alleged that, whilst drawing the cancer out of the body it will make quite a "Crater" which contains the PLUG (mastisized cancer) that eventually vacates it and allows the body to heal this wound very quickly.
    May be it is worth trying on ONE skin cancer and see how it goes!

    Type cansema into google and after this has been exhausted type in ""Black Salve" + Cancer" and make up your own mind as to what is propaganda and what is "Fair Dinkum".

    Lot cheaper & Safer (???) than Surgery especially if chemo is involved after!!!
    More effective ??? - Let me know if you try it please. I don't have skin cancer and have no friends who have!

    http://www.blacksalveaustralia.com/

    http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=15&cad=rja&uact=8&ved=0CDYQFjAEOApqFQoTCM6-is6Zh8YCFSiUpgodA4MA2Q&url=http%3A%2F%2Fwww.panaceatech.org%2FBlack%2520Salve%2520Alternative%2520Cancer%2520Treatment.pdf&ei=u0N5VY71GaiomgWDhoLIDQ&usg=AFQjCNFA4eK8L6hVwUqUafIPxX7JJ3gTHg&sig2=t7TErViEH8jzJOVExYygVQ&bvm=bv.95277229,d.dGY
    maelcolium
    11th Jun 2015
    11:59am
    I was in employer super funds for 20 years. In the last ten years I salary sacrificed as much as possible to top up believing that it would improve my income into retirement. When retired I found myself no better off than someone who didn't save. When the government started messing around with the rules I cashed out to safeguard the capital. Super benefits the rich, not the middle to lower income earners. It's the biggest modern scam on the Australian people and should be scrapped and replaced with a nationalised pension fund which can't be messed about with by politicians. We are the only country to go down this ridiculous path and have overly complicated what should be a simple process of ensuring that everyone is able to retire on an income above the poverty level.
    MICK
    11th Jun 2015
    12:11pm
    "Super benefits the rich". I have saying this for some time. The current system is a TAX SHELTER created specifically for the rich. No accident!
    And you have to ask WHY does the Abbott government refuse to end the rorting from the richest amongst us? The short answer is whose money got this government elected? Not too hard to work out.
    marls
    11th Jun 2015
    5:13pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    marls
    11th Jun 2015
    5:13pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    marls
    11th Jun 2015
    5:13pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    marls
    11th Jun 2015
    5:14pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    marls
    11th Jun 2015
    5:14pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    marls
    11th Jun 2015
    5:14pm
    totally agree no other country in the world means test the old age pension, overseas if you work and pay tax you get the pension. not this country. and to top it all off. my mother gets the aust, pension sent to her, she also gets her pension in europe and she also gets my fathers pension as he is deceased, to top it all off she also gets a small pension from belgium because my father went to war for his country
    KSS
    11th Jun 2015
    12:42pm
    Here is yet another lesson on how to create fear with an opinion piece that has nothing to do with the original article which itself is far too general to have any real meaning or lead to any meaningful conclusions.

    You simply cannot withdraw super funds early on a fear of what may happen in the future or to cash in on an aged pension later. As the original article says there are very strict rules about under what circumstances you can access funds early i.e. before 'retirement age'.

    Despite the 'speculation' that financial hardship may be governing the trend, there is no evidence proffered for that conclusion. How do we know for example that is not being driven by ex-pats returning to country of origin and taking their super with them?

    Yet another beat-up based on nothing and yet there are those that will take the bait!
    Peterrj
    11th Jun 2015
    3:02pm
    KSS 'Despite the 'speculation' that financial hardship may be governing the trend there is no evidence ... for that conclusion.' Aye??? Do the maths: Aged Pension plus a few pension benefits for a couple is, say, $35,000 plus say $400,000 in Super being withdrawn at the usual rate of 5% gives an income per year of $$35,000 plus $$20,000 equals $55,000. Now what if I have, which I don't, $1,000,000 in my Super fund drawn at 5% then that gives me an income of just $50,000/yr. Maelcolium found out this truth the hard way! So KSS, can you just revise your comment that there is NO evidence that having more Super can cause 'financial hardship'???? Having $600,000 more in Super than the Aged Pensioner with just $400,000 would mean a nett lost of income per year of $5,000!!!! Spend $600,000 and get paid $5,000 mor each year???? What great scheme ... or should I say scam!!!!

    Having said that, I totally agree with the stated view that saving money in Super is a scam on the working and middle class .... And who thought up this scam?????
    Sceptic
    11th Jun 2015
    3:27pm
    Perhaps you can help me with this one Peterrj. I thought that 5% of 400,000 was 20,000.How does it become 35,000?
    Anonymous
    12th Jun 2015
    5:14pm
    It is $20,000 Sceptic. It's the way he's written it that confuses a little, but if you read carefully, he's saying $35,000 in pension + $20,000 in super = $55,000, and he's absolutely correct. The millionaire ends up poorer! Clearly Morrison, Hockey and Abbott are fools!
    BJ Moose
    11th Jun 2015
    5:01pm
    I can help you there. After the LNP announced their proposed changes to the Age Pension assets test and taper rate, $400,000 in super became the magic number. With just $25,000 above the upper limit of assets to qualify for a full pension, you will get $35,000 from the Age Pension (a bit less in fact) and $20,000 from your super at 5% making a total income of around $55,000. If your super balance is over $823,000 then there's no Age Pension and your super is going to have to work awfully hard to earn $55K. Hence anyone currently working and salary sacrificing is going to think 'What's the point?'
    Sceptic
    11th Jun 2015
    6:46pm
    Sorry BJ, a single pension is $20,000. + $20,000 = $40,000
    Peterrj
    11th Jun 2015
    11:31pm
    Sceptic, we are obviously referring to the Aged Pension for a couple. And agreed the actual Aged Pension is worth a little less than $35,000 (for a couple) but what is the Health Card component of the Aged Pension worth per year .... It could be worth a Motza that the selffunded retirees miss out on. The benefits of the Aged Pension with a small amount of Super, plus welfare payments if needed are worth heaps more income per year than a large sum in Super will earn. Sorry folks, thats the cold reality of the matter. And if you want to be self funded then you had better save a double motza of cash or you will be worse off that the 'poor' aged pensioner!!!! Indeed I agree with Moose, 'what's the point' ... Then unless you can save that double motza in Super then spend your Super money now and enjoy life. Then rip into the full Aged Pension ... Financially you will be far better off???? Do the maths!!!! Anyone willing to disagree???
    marls
    11th Jun 2015
    5:02pm
    i access my super early aged 63 the reason being that i got sick tired of travelling nearly 4hrs daily. i would leave when it was dark and returned at night that is not a life. now i sit at home and do what i want with my time and money. after all i was on a govt super fund and i can assure you for me to get super i had to pay for it out of my own money. it was not given to me as as extra
    marls
    11th Jun 2015
    5:08pm
    mick
    i agree with you i did the same i saw the writing on the wall. the only people in the future to get welfare will be the bluggers not the tax payers, and the govt wants people to work until they drop, because then the super if there is no spouse if taxed at the highest rate, and the winner is the govt.
    Peterrj
    11th Jun 2015
    11:42pm
    Maris, that's a bit harsh claiming only the bludgers will get the Aged Pension. But true it is, the only test to get the full Aged Pension will be merely achieving pensionable age and not having saved in excess of a little more than $400,000 in Super. So yes, the bludgers will get the Aged Pension automatically when they are 'entitled' to the aged pension. Just think of it as an graduation process from the dole to aged pension. Hey, lighten up Maris, we need tax payers like you to allow these bludgers (as you call them) to live their life with some dignity.
    Peterrj
    11th Jun 2015
    11:15pm
    Sceptic, read my sentence again. If you get the aged pension for a couple plus a few benefits and draw down 5% of $400,000 that gives you $35,000 plus $20,000 = $55,000. Yet $1,000,000 in Super disqualifies you from all aged pension benefits and if you draw down on that sum at 5% you only get $50,000. And also consider, you Super Fund may go up but it could also come down ie 'GFC the Second' while the Aged Pension can only go UP due to it being linked to the CPI etc. Wouldn't you like to have $600,000 to recklessly spend on yourself and get paid MORE per year on top of the spending spree? But if you act 'responsibly' and only draw down 5% of the $1,000,000 then you get less to live on per year. Is it any wonder why people are now 'spending' their saved Super cash to get more????? I know it's crazy but I did not design these stupid rules. So what is the message here for those with a modest Super balance at pensionable age????
    Sceptic
    12th Jun 2015
    3:27pm
    Firstly, I am waiting for you to quantify the $15,000 in extras that you say that the pensioner receives. Secondly, how about drawing down $5,000 of capital each year by the $1,000,000 Super holder. By your calculation and ignoring that after 120 years of doing that they will then be on a full pension having just $400,000 of capital left.

    The object of posting this is to show how stupid this type of "clever" calculation of yours is.
    Peterrj
    18th Jun 2015
    11:50pm
    Sceptic, you are not reading my calculations correctly. First I am not saying that a pensioner couple get $15,000 in extras, I don't know where you are getting that figure from???? A couple on the full pension receive about $33,000 plus few extras worth say $2,000 making it $35,000/yr. What is the health card worth each year? That is an extra that the self funded retirees do not have.

    Secondly, I don't advocate that the Super Holder draws down $5,000/yr? Where do you get that from???

    However the Super pension rules require that you draw down on your Super balance at 5%. 5% of $400,000 is $20,000 plus the Aged Pension of $35,000 that gives the Aged Pensioner on a full pension an income of $55,000/yr. If the Millionaire self funded pensioner draws down 5% from the $1,000,000 Super balance then that gives the Millionaire SF Pensioner an income of just $50,000.

    So if you were the Millionaire SF Pensioner would you prefer to receive $55,000/yr or $50,000/yr? If you prefer to have more and get $55,000/yr then all you have to do is spend $600,000 on anything you like as quickly as possible and then be paid $5,000 more a year than if you remain a Millionaire Self Funded Pensioner!

    You don't need to be clever to work that out.

    I know that it all Sounds crazy but I did not make these rules!!!!
    jackie
    13th Jun 2015
    10:21am
    Many have to access it because they get into debt whilst trying to find work. The dole is not enough.
    jackie
    13th Jun 2015
    10:28am
    Ever since super lump sum payments stopped back in the 80's it turned into a scam. I remember lucky Australians that received their super before then bought their homes with cash and retired on pensions.

    13th Jun 2015
    11:42am
    Does the Government want us to NOT draw lump sums from super? Maybe limit drawings to the regulated 5%? Then why are they attacking people who saved well but couldn't quite make self-sufficiency level? The stupid means test changes are going to FORCE many to draw from their superannuation, or else live much more frugally than pensioners with a lot less. These changes make no sense. As pointed out by others, a couple with $825,000 to $1 million will be substantially worse off than a couple with only $400,000. Plenty of those who are hit by this dumb change are going to do precisely what Tony Abbott is urging them NOT to do - draw down on super and spend - because it will give them considerable financial gain.

    If the Government wants to discourage drawing down on super, they need to stop attacking savings and focus on income testing and perhaps taxation. Assets testing in its current and proposed form is unfair on a number of levels, and can only be a disincentive to save.
    Peterrj
    19th Jun 2015
    12:04am
    Rainey, as illogical,as it may sound, I agree with you: A couple of pensionable age with $1,000,000 in Super may be financially worse off from an annual income perspective than a couple with only $400,000. Remember Professor Miller in the 60's, he would ask, 'Why is it so?' In fact, a couple with $1,200,00 would receive about the same as the couple on $400,000. So why save the $800,000 just to get the same as the person with just $400,000???? There is a whole world of denial and hardship went into saving that extra $800,000 that is not appreciated by those who envy those Millionaire Part Pensioners. I conclude that the Millionaire Pensioners have been duped into saving for their retirement when they could have had more spending wealth through their life time and now find that the Govt had dudded them badly. And no, I don't have $800,000 plus in Super.
    Blossom
    22nd Jun 2015
    4:08pm
    Some people qualify to withdraw super funds early if they can prove severe financial hardship such as danger of losing business from which they support themselves, their families and would otherwise have to close their family business and terminate employment of others.; also risk bankrupcy and loss of all their possessions including family home and contents.
    Mike
    24th Jun 2015
    3:38pm
    Hockey's changes to the part pension thresholds shows the Government cannot be trusted, smashing hundreds of thousands of retirees retirement strategies after they put trust in their Government. They can change the rules anytime it suits them, yet Hockey has shown he is not adverse to rorting the system and lining his own pockets. His shonky travelling allowance claims is just one example.


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