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Government changes to super – early access to $10k and pension changes

In March 2020, the Federal Government announced a range of financial assistance measures to support Australians impacted by COVID-19. This included a number of temporary changes to superannuation legislation relating to early release of super savings, and a reduction in the minimum drawdown rate for retirees. We have included details of these recent changes below and encourage you to refer to this page regularly for updates. You may also be eligible for other financial assistance, and should be alert for a number of reported COVID-19 related scams in Australia.

Temporary early release of superannuation

From 20 April, members who satisfy the eligibility criteria will be able to access up to $10,000 of their superannuation in 2019-20 financial year and a further $10,000 in 2020-21. For more information, see the frequently asked questions below or refer to the government factsheet.

Am I eligible?

To apply for early release, you must satisfy any one or more of the following requirements:

  • you are unemployed; or
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020:
    – you were made redundant; or
    – your working hours were reduced by 20 per cent or more; or
    – if you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent or more.
How will accessing my super now impact my long-term goals?

We recognise the financial hardship being suffered by a large proportion of the community. However, with all decisions, we encourage members to carefully consider their individual circumstances including their long-term financial situation, objectives and needs – before seeking early access to their retirement savings.

Investment markets have experienced significant losses in recent weeks and there is a risk that unnecessarily accessing your super funds could lead to a compounding negative impact on your retirement outcomes in the long-term.

For example, according to modelling by SuperRatings (and based on the assumptions used by ASIC’s MoneySmart in their superannuation calculator), for a 35 year old invested in a growth option, taking $10,000 out of their super now and $10,000 in July, this would have grown into a balance of approximately $80,000 at age 67, or $42,000 in today’s dollars.*

If you’d like to discuss your options with a professional, we can put you in touch with a financial adviser. Call us on 1800 025 241.

*today’s dollars based on adjustment of 2% pa to allow for rising cost of living

How do I apply?

You can apply directly to the ATO through the myGov website from 20 April, if you meet eligibility conditions. Applications for the 2019-20 financial year must be submitted between 20 April – 30 June and 1 July – 24 September for the 2020-21 financial year.

What is the online application process?

Upon logging into your myGov account, you will be asked to:

  1. acknowledge and certify that you are eligible for early release of super
  2. input the amount (up to a maximum of $10,000) you would like to release from your super account. Note: if you wish to access money from more than one super account, the total amount cannot exceed $10,000.
  3. input your bank account details for which the money is to be paid into.

After the ATO has processed your application, they will issue you with a determination. The ATO will also provide a copy of this determination to us. Upon receiving your request from the ATO, we will process superannuation payment as quickly as possible to your nominated bank account.

Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Further guidance will be available on the ATO website.

Temporary reduction in minimum drawdown rates for retirees

For members with iQ Retirement Pension accounts, the Government is reducing the amount required to be drawn down by 50 per cent for the 2019-20 and 2020-21 financial years. This is not an automatic process though, and your current Pension payments will remain in place unless you decide to take action and advise us.

We’ve communicated directly with our pension account members to confirm how to complete this process, and for eligible members the easiest way is via their online account.

The following table shows the new, reduced rates that apply for the 2019-20 and 2020-21 income years.

Age Default drawdown rates (%) Reduced rates (%)
Under 65 4 2
65-74 5 2.5
75-79 6 3
80-84 7 3.5
85-89 9 4.5
90-94 11 5.5
95 or more 14 7

 

For more detailed information, please refer to the government factsheet.