Withdrawing from your super fund early will reduce your super balance, which could significantly impact your retirement income, leaving you with less money during retirement. You’ll also need to consider any tax obligations that may apply when accessing your super early. Depending on your situation, a portion of your withdrawal may be taxed, which would further reduce the amount you receive. Additionally, if your super includes insurance cover, withdrawing funds could reduce or even cancel that insurance, leaving you without protection.

It's also crucial to think about how early access could affect any government benefits or income support payments you currently receive. Early withdrawals may impact your eligibility for these benefits, so it’s important to understand the full picture before making any decisions.

Always consult the Australian Taxation Office (ATO) guidelines and speak to your super provider to ensure you understand all the potential outcomes. If you have questions around how your retirement funds will be impacted from withdrawing from your super early, it might be a good idea to seek the advice of a financial adviser.

What to consider before accessing your super early

Before you apply for early access to your super, here are a few key things to keep in mind:

Impact on your retirement income

Withdrawing super early reduces the money you’ll have when you retire, which may affect your future financial security.

Possible tax obligations

Depending on your situation, accessing super early may be taxed, lowering the amount you receive.

Insurance cover

If your super account includes insurance, withdrawing funds could reduce or cancel your cover.

Effect on government benefits

Early access to super might affect your eligibility for income support payments or other government benefits.

Remember, accessing your super is only allowed in limited circumstances, so it’s important to balance your immediate financial needs with the long-term impact on your retirement and insurance. Always check the Australian Taxation Office (ATO) guidelines and ensure you understand the consequences before making a decision.

Accessing your super with a balance under $200

You may be able to access your super if your balance is less than $200 in certain situations:

Employment has ended

If your job has ended and your super balance is below $200, you may be eligible to withdraw it.

Lost super account

If you discover a 'lost super' account with less than $200, you can withdraw those funds as well.

To proceed, contact your super fund to confirm eligibility and check if you can access any ATO-held super accounts. No tax is payable when withdrawing super with a balance under $200.

Accessing super due to severe financial hardship

The Australian Taxation Office (ATO) does not process applications for severe financial hardship withdrawals from super. To apply, you need to contact your super provider directly.

To qualify, you must have received government income support payments for 26 consecutive weeks and be unable to meet reasonable and immediate living expenses for yourself or your family. The withdrawal amount ranges from $1,000 to $10,000, and you can only make one withdrawal in a 12-month period. If you’ve reached your preservation age plus 39 weeks and are not gainfully employed, there are no restrictions on how much you can withdraw.

You may need to provide evidence, such as a letter from Services Australia, to confirm your eligibility. Withdrawals are taxed as normal super lump sums. If you're under 60, the tax rate is typically between 17% and 22% on the taxable element. For those aged 60 or older, withdrawals are generally tax-free.

Accessing super due to temporary incapacity

If you're temporarily unable to work or need to reduce your hours due to a physical or mental medical condition, you may be able to access your super. This type of withdrawal is usually linked to insurance benefits in your super account, and the payments are made regularly for the time you are unable to work.

Withdrawals due to temporary incapacity are taxed as a super income stream. Contact your super provider to explore your options and confirm if you're eligible for insurance benefits attached to your account. There are no special tax rates for these withdrawals.

If your super account doesn’t include insurance benefits, you may want to consider accessing your super under severe financial hardship.

Accessing super due to permanent incapacity

If you're permanently incapacitated, you may be able to access your super under what’s known as a “disability super benefit.” To qualify, your super fund must be satisfied that a permanent physical or mental medical condition prevents you from working in any job you are qualified for through education, training, or experience. However, you may still be eligible for withdrawal even if you're working in a different role or field.

You can choose to receive your super as a lump sum or as regular payments. Withdrawals due to permanent incapacity come with different tax components, and to receive favourable tax treatment, your condition must be certified by two medical practitioners. Contact your super provider to initiate the process. The tax on your withdrawal depends on the mix of tax-free, taxed, and untaxed elements in your super account.

If you're under your preservation age and receive the disability benefit as an income stream, you'll get tax offsets that reduce the tax rate on the taxed component by 15%. If you have reached your preservation age or choose to withdraw a lump sum, your disability benefit will be taxed according to standard super tax rules.

Accessing super on compassionate grounds

In certain situations, you may be able to withdraw some of your super on compassionate grounds. These situations include needing funds to cover specific expenses such as:

• Medical treatment or transportation for yourself or a dependant
• Palliative care
• Home loan or council rate payments to prevent losing your home
• Modifications to accommodate a disability for yourself or a dependant
• Funeral, burial, or death-related expenses for a dependant

Contact your super provider to check your eligibility for compassionate grounds withdrawal and ensure you meet the required criteria before proceeding.

Why are their eligibility requirements around accessing super early?

Superannuation is designed to support you financially during retirement, which is why strict rules govern when and how you can access it. Generally, you cannot access your super early unless you meet specific conditions set by the government. These conditions are in place to ensure your super grows over time, providing you with financial stability in retirement. This is governed by the sole purpose test.

Why preservation age varies by birth year

The preservation age, set by the government, determines when you can access your super. In response to longer retirement periods, the preservation age is gradually increasing from 55 to 60. This change aims to encourage individuals to build larger super balances, ensuring better financial support during retirement.

Unless you qualify for special circumstances—such as severe financial hardship, permanent incapacity, or compassionate grounds—you generally won’t be able to access your super until you reach your preservation age. It’s important to plan accordingly to ensure your financial security in retirement.

Be aware of scams and schemes

Be cautious of potential scams or fraudulent schemes where individuals may falsely claim to be affiliated with the Australian Taxation Office (ATO) or your super fund, with the intent to steal your money or personal information.

Also, be wary of anyone offering services like super early access for a fee, as these services may be available for free through legitimate channels.

If you receive unsolicited communication—such as a phone call, text, or email—offering help with early super access, avoid sharing personal details or clicking any links. Always verify the authenticity of the contact before proceeding.

Warning about illegal early release schemes

Be cautious of individuals or organisations that claim they can help you access your super early by transferring it into a self-managed super fund. These schemes are illegal, and participating in them can result in severe penalties.

Always ensure any superannuation transactions comply with Australian laws and avoid any offers that sound suspicious or too good to be true. If in doubt, seek advice from your super fund or a trusted financial professional.