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Can you draw on your super during financial hardship?

Jodie Humphries avatar
Jodie Humphries
- 4 min read
Can you draw on your super during financial hardship?

The funds in your superannuation account are meant for use after you retire to support you when you’re no longer working. However, regulations do allow some Australians early access to their super in exceptional circumstances, such as facing severe financial duress.

Typically, you may withdraw super without any restrictions only after you turn 65. Although there are scenarios in which Australians can access these funds before retirement age, including:

  • Severe financial hardship.
  • Compassionate grounds, such as making a mortgage repayment council rate payment so you don't lose your home. 
  • Access due to a terminal medical condition,
  • Access due to temporary or permanent incapacity. 

 Before you go dipping into your super balance, you should check with your super fund manager about the conditions you need to meet and the amount of super you can access. You may also need to consult a tax advisor as some part of the super withdrawal may be taxable.

How to access your super when facing financial hardship

If you’ve found yourself under financial strain, you may be eligible to access some of the funds in your superannuation. You will need to ensure you meet the criteria of eligibility for accessing super under financial hardship, and then simply apply to your fund directly for release of super.

If your super provider requires evidence, you will need to request a letter confirming you have received eligible government income support payments continuously for 26 weeks or more from Services Australia.

According to the Australian Taxation Office (ATO), if you are below preservation age plus 39 weeks, you may access between $1,000 and $10,000 a year, and make one withdrawal in a 12-month period. 

You will also need to meet the following criteria:

  • You have received eligible government income support payments continuously for 26 weeks. You must have been in receipt of these payments when you obtained written evidence from the relevant government department.

  • You are not able to meet reasonable and immediate family living expenses.

If you’re over the preservation age, you’re legally allowed to access the funds, with some restrictions depending on your circumstances, and can access the money as a lump sum or income stream

Can I access super to pay off my debts?

You may be able to access your super early to repay your debt, as there are no restrictions on how you use the funds once they’ve been transferred to you. However, just because you can, doesn’t mean you should. 

If debt is the reason you’ve found yourself in financial hardship, you may want to seek professional financial advice to help you not only get out of debt but avoid being in the same situation in the future.

Call the National Debt Helpline on 1800 007 007 for free and confidential advice from professional financial counsellors.

It may be smart to seek this advice before applying for the super withdrawal, especially as the funds you’re allowed to withdraw are not that substantial, and may not cover all your needs. The National Debt Helpline may also help you to determine if you are eligible for government allowances or grants that help with some expenses. 

If you’re considering accessing your super early to avoid defaulting on your mortgage, speak to your lender first. They want you to keep your home as well, and you’ll be able to request being put on hardship support. You may be able to take a pause from your mortgage repayments at this time until you get your head above water again. 

You could even consider switching to interest-only repayments to reduce your regular mortgage bills. This comes with its own risks though, so be sure to compare your options carefully. 

Ideally, you should exhaust any and all avenues before choosing to access your super early, as this will have long-term consequences for your final super balance.

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Product database updated 19 Apr, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.