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.”


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?

Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.