In response to COVID-19, the Australian Government has relaxed the hardship restrictions enabling more eligible Australians early access to their superannuation.
This includes the ability to withdraw $10,000 from their super twice – once this financial year before June 30, and once again in the first few months of the new financial year after July 1.
The eligibility criteria required to access your super includes:
You are unemployed
You are eligible for some Centrelink benefits, such as Job Seeker, special benefit or parenting allowance
You were made redundant or your work hours were reduced by 20% or more after January 1st, 2020. This also applies to sole traders and contractors.
For some Australians, the ability to withdraw from their super has been a much-needed lifeline.
The financial, social, economic and health impacts of the pandemic have been unprecedented, with many lives being changed forever. However, it’s critically important that you inform yourself of the impacts that withdrawing from your super today will have on your financial future.
It may sound like only $10,000 today, but in a high-returning super account, that amount can cost your retirement significantly.
These numbers will vary depending on your individual situation, such as your salary, age and super provider, but this example shows the magnitude of what a simple $20,000 super withdrawal could mean for your financial future.
We understand that many Australians are left without a choice but to access their super right now if it means keeping food on the table and a roof over their head. But if you view your super as free money for recreational spending on a new boat or holiday, make sure you inform yourself before making this life changing decision, as it will be the most expensive money you’ll ever spend. Think first before you potentially cost yourself more than half a million dollars in lost retirement income.
Before you access your super, make sure you explore all your options.
If COVID-19 has left you in a difficult time financially, there are a number of Government assistance packages available right now, including JobKeeper, JobSeeker, income support payments and household support payments.
If you’re struggling to keep up your repayments or pay your bills, contact your creditors’ financial hardship team. All banks, lenders, debt collection agencies, and most telecommunication and utilities companies have financial hardship teams, whose job is to support their customers through tough times.
What else do I need to consider?
More than 70% of Australians hold their life insurance through their super. If you’re one of these people, keep an eye on your super balance. If it falls too low because you’re withdrawing from it, you may lose your life and income protection cover.
What if I’ve already withdrawn from my super?
If you have already taken the money out of your super, or you plan on doing so, it’s important that you replace it as soon as possible. There are a number of ways you can contribute to your super and replenish these funds for future you.
- Direct deposit
- Set up automatic super contributions from your pay by your employer
Before you access your super to pay your bills or repayments, talk with your bank or lender to see how they can help. At LoanU, we are committed to finding solutions for our community, now more than ever. If you’re a LoanU customer who has been directly impacted by COVID-19, we encourage you to please get in touch with us so we can help get you back on track.