Getting super before your preservation age
Sometimes when you are in financial trouble it might seem like a solution to access your super, but depending on your situation, this may not be the best way to help you out of financial trouble. Other options include:
Be cautious if a broker or your lender suggests accessing your super as a first step. It may save your bacon in the short term or it may just be throwing good money after bad.
By law, you generally get your super only when you:
- permanently retire from the workforce, and also
- reach the minimum age set by law, called your 'preservation age', see the following table.
| Your date of birth | Minimum age for getting your super benefits |
| After June 1964 | 60 |
| July 1963 - June 1964 | 59 |
| July 1962 - June 1963 | 58 |
| July 1961 - June 1962 | 57 |
| July 1960 - June 1961 | 56 |
| Before July 1960 | 55 |
You can get your super earlier only in limited circumstances
Incapacity
Contact your fund if you suffer permanent incapacity. You may also be paid a non-commutable income stream during a period of temporary incapacity.
Severe financial hardship
Contact your fund. If the rules allow early release of benefits, you must satisfy the trustee that you have been receiving a Commonwealth income support payment for a continuous period of 26 weeks and you cannot meet your reasonable and immediate family living expenses.
Compassionate grounds
Contact your fund. If the rules allow early release of benefits, the 'compassionate grounds' are set out in the law. The Australian Prudential Regulation Authority (APRA) must consider your application first, before your fund trustee can make a final decision.
Compassionate grounds involve medical treatment for serious conditions that is not readily available through the public health system, transport for medical treatment, changes to a home or vehicle because of a severe disability, palliative care, funeral and burial expenses, or to prevent the forced sale of your home by your mortgagee. APRA has more information about specific compassionate grounds.
Leaving Australia permanently
Contact the ATO. If you work in Australia as a temporary resident you may be eligible to claim your super. This payment is not available for permanent Australian or New Zealand citizens because they have the option of retiring in Australia.
Small balance
Contact your fund. If the fund rules allow it and you account has less than $200 (preserved benefit) you may be allowed to withdraw the money when you finish your employment. A fund may be able to pay you if you were previously classified as a lost member and the preserved benefit, at the time it is paid to you, is less than $200. Unless you really need the money, it's generally better to roll it over into your next fund, and you won't have to pay tax.
Illegal early access
Avoid illegal schemes that try to get your super money out early, and save yourself from getting cheated and from heavy tax and legal penalties. These schemes are sometimes promoted by word of mouth or shady advertising.
Report to ASIC or the Australian Tax Office (ATO) anyone who tries to talk you into getting your preserved benefits early through a self-managed super fund or for a fee.
True stories
Scams involving early release of superannuation
If you're under the age of 55 watch out for financial advisers offering to quickly and easily arrange for your preserved superannuation benefits to be paid out in cash.
'Some cases we've taken action against have involved the theft by unscrupulous advisers of all or part of the consumers' superannuation benefits', said ASIC's Executive Director of Consumer Protection.
'In other cases we've seen financial advisers take large fees before forwarding the remainder of the super benefit to the client. You should be aware that you can only gain early access to your preserved super benefits in restricted circumstances', our director said.
'In addition to the risk of losing your money, you may suffer taxation complications as a result of these fraudulent payments. Fraudulent early access also means that you no longer have these superannuation benefits available to you when you retire.
Advisers have used a variety of methods to deceive the consumer's superannuation fund into paying out these benefits directly to the adviser in cash, rather than leaving the money in the fund or paying directly to another eligible superannuation fund.
'We are concerned that people experiencing financial difficulties have been targeted by some advisers. It is possible in limited circumstances for money to be released early on the grounds of severe financial hardship, but you should talk directly with your fund in such cases', he said.
Under the Superannuation Industry (Supervision) Act, the preserved component of your superannuation benefits cannot be paid out in cash until you turn 65, retire from the workforce after age 55 or meet certain other limited criteria.
If you have a friend who is dealing with an adviser who is urging them to access their funds please tell them that:
- in the past unscrupulous advisers have taken a large proportion of people's funds
- they may face financial penalties under the Income Tax Assessment Act if they go ahead
- they should get independent advice from their lawyer, employer or union representative.
True stories from victims of early release schemes
A superannuation dream betrayed
Read what happened after Kim acted on an advertisement that said people could take control of their own superannuation.
Rick's superannuation nightmare
'I'm really frightened because now we have no assets of our own and I don't have any superannuation at all. How are we going to fund our retirement?' Read about Rick’s redundancy and how a flyer under his windscreen wiper led to his nightmare.
Some schemes we've taken action against
