As part of the Federal Government’s economic response to the COVID-19 pandemic, legislation has been passed to allow eligible Australians to access some of their Superannuation early. If you are eligible, you can access up to $20,000 of your super over the next two financial years; up to $10,000 in the 2019-20 financial year and up to another $10,000 in the 2020-21 financial year.

The scheme will be tax-free and a form of relief for those currently under significant financial distress, not impacting any Centrelink or Veteran’s Affairs payments or any other income.

However, it is important to consider some potential risks and the long-term impacts of taking out money before retirement. Accessing super early should be approached with extreme caution and only as a last resort as it will significantly impact your savings in the long run. As you are losing the benefit of compound interest over a number of years, you can be likely to miss out on more than double or triple the amount you are withdrawing by the time you retire.

Depending on the severity of your financial hardship you may look towards considering more serious financial solutions such as bankruptcy if the maximum payments from early super will not cover your debts. Whilst payments of early super during or after bankruptcy cannot be claimed by your trustee, super payments received before bankruptcy are claimable by your trustee.

If you are experiencing financial distress or would like more information on assessing your super early then please contact Australian Bankruptcy Services. There are a number of considerations before deciding whether to access your super early due to the long term impacts and risks involved. We are open 24/7 so contact us at your own convenience on 1800 462 767.