Accessing Superannuation – Taking Out Your Superannuation Early

Taking out your superannuation

Superannuation is a valuable and tax effective way for people to ensure that they are able to adequately fund their retirement. Of course, it is always a good idea to learn as much about super as you can, so that you know exactly how you will benefit and exactly what you can and cannot do regarding your superannuation fund.

There are many different things that consumers will want or need to know with regards to their super, ranging from the basics and fundamentals of superannuation through to changing jobs, protecting super and taking out your super. When taking out your superannuation you need to make sure you are up to speed on when you are able to take out your contributions based on factors such as preserved and non-preserved contributions.

By learning about the rules and regulations of taking out your superannuation you will learn all about when you can and cannot withdraw your contributions and can learn about the criteria you have to meet in order to make eligible contributions withdrawals.

When can you withdraw your money?

Your ability to withdraw your money is based on whether you are looking at preserved or non-preserved contributions. You can usually withdraw non-preserved contributions when you want or need to. However, for preserved contributions, you can usually only withdraw them under certain circumstances, so this is something that you will need to bear in mind. The circumstances that usually warrant being able to withdraw preserved funds include:

  • When you retire: Depending on your date of birth this could be between the ages of fifty five and sixty
  • Total and permanent disability: If you suffer total and permanent disability you may be able to withdraw your preserved contributions
  • Terminal illness: If you are aged under sixty years and have a terminal illness you can withdraw on preserved funds
  • Death: Preserved funds can be withdrawn upon the death of the fund holder. Your funds will be paid out to the named beneficiary if there is one. Otherwise a decision will be made by the trustees of the fund with regards to who will received the benefits
  • Hardship: You may be able to withdraw preserved contributions if you can prove financial hardship or you can show that there are other compassionate grounds under which the funds can be withdrawn

Proving financial hardship or compassionate grounds

If you believe that you may be able to withdraw against preserved contributions as a result of financial hardship or other compassionate grounds, it is advisable to familiarise yourself with what is considered to be financial hardship or a compassionate reason. This includes the following:

Severe financial hardship: There are two requirements that have to be met regarding severe financial hardship. This includes:

  • You need to have been getting a social security pension or benefits for a period of at least 26 weeks
  • You must show that you cannot meet reasonable and immediate family expenses

It will be the fund trustees that will make a decision with regards to whether you are eligible based on the second requirement, although there are guidelines in place for them to use.

Compassionate reasons: This includes a number of possible reasons, as outlined in regulations and this includes:

  • Where medical treatment is required for a life threatening illness, acute pain or chronic pain where the treatment is not available through the public health system. Also in cases where medical transport is needed for these reasons
  • Where modifications are needed to the family car or home in order to cater for the needs of a disabled dependent
  • Where money is needed for palliative care or where there are death related expenses to be met

How money from your super is paid

When money is withdrawn from your super, you will have a couple of options with regards to how you receive the financial benefit. You can have this in the form of regular payments in the same way as a pension. Alternatively you can opt for a lump sum payment. Within these two options there are also additional options relating to reinvestment. Many people will need to determine which of the two main options are going to be best suited to their needs, but this is something that often depends on their circumstances as well as their preferences.

When you can retire

Given that retirement is one of the eligibility requirements to withdraw money from your super, some people may consider retiring on the basis that they have their super to rely on. However, it is important to bear in mind that although you are free to retire early you may not be able to access your super right away

Learn more about LifeTime financial group for professional financial advice

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