4.8.2.20 Early Release of Superannuation

Summary

This topic covers the following matters:

• early release of superannuation benefits (section 9(1)-'superannuation benefit'),
• severe financial hardship (1.1.S.120),
• severe financial hardship - income support requirements,
• early release of superannuation for income support recipients who do not meet the severe financial hardship requirements,
• Superannuation Holding Accounts Reserve, and
• Centrelink's role in the early release of benefits.

Act reference: SSAct section 9(1)-'superannuation benefit'

Early release of superannuation benefits

The superannuation legislation administered by APRA allows early release of preserved superannuation benefits in limited circumstances.

Example: Circumstances include severe financial hardship and compassionate grounds.

The Government uses the following legislative means to encourage people to accumulate retirement benefits:

• tax concessions given to superannuation funds (section 9(1)-'superannuation fund'), and
• a preservation age on superannuation benefits.

Currently, a person over the age of 55 years AND RETIRED does NOT need to be in financial hardship to gain access to their superannuation benefits.

Act reference: SSAct section 9(1)-'superannuation fund'

Severe financial hardship

Early release of superannuation benefits on the grounds of severe financial hardship is permitted when:

• an income support recipient has met the income support requirements, AND
• the superannuation fund trustee considers they are unable to meet reasonable and immediate family living expenses, AND
• an income support recipient is not gainfully employed on a part-time or full-time basis, AND
• the rules of the superannuation fund permit release.

Severe financial hardship - income support requirements

Income support payment refers to a social security pension (section 23(1)-'social security pension') or social security benefit (section 23(1)-'social security benefit').

Exception: YA paid to a person undertaking full-time study and Austudy.

Some non-social security payments are also considered to be income support payments for the purposes of the early release of superannuation benefits. These are:

• service pensions,
• drought relief payment under the Farm Household Support Act of 1992, as in force immediately before commencement of the Farm Household Support Amendment Act on 1 December 1997,
• exceptional circumstances relief payment made under the Farm Household Support Act of 1992, and
• payment of salary or wages under the CDEP.

The following table shows the conditions to be met for income support recipients who request the early release of their superannuation benefits to be classed as being in severe financial hardship.

Explanation: The notional continuous period of receipt of income support payments (section 38B) DOES NOT apply in this instance. For income support recipients to be classed as being in severe financial hardship, the income support recipient must have actually received a payment for each fortnight. Periods of nil entitlement do not count towards a continuous 26 week period.

Act reference: SSAct section 23(1)-'social security pension', section 23(1)-'social security benefit', section 38B Notional continuous period of receipt of income support payments

Early release of superannuation for income support recipients who do not meet the severe financial hardship requirements

There are very limited compassionate grounds that allow an income support recipient who does not meet the income support requirements to gain access to their superannuation benefits. APRA considers applications on compassionate grounds, and an income support recipient's superannuation fund trustee or retirement savings account provider can provide advice to income support recipients.

SHAR - income support requirements

The qualifying period of income support for superannuation investments in SHAR is 52 weeks (continuous) for people less than 55 years and 39 weeks, and at least 39 weeks (cumulative) for people aged 55 years and 39 weeks or more.

Centrelink's role in the early release of benefits

Applications for release of superannuation benefits on the grounds of severe hardship are made to the income support recipient's superannuation fund, and must be submitted with a letter from Centrelink. Centrelink does NOT have any role in whether all of the conditions for early release of benefits have been met. Centrelink's ONLY role is to supply, on request from an income support recipient, confirmation that the income support recipient has received income support payments for the required period.

Income support recipients MUST advise Centrelink if any benefits are released, as this may affect their income support payments.

Policy reference: SS Guide 4.8.2.10 Principles for Assessing Superannuation Investments

______________________________________________________

Last reviewed: 3 January 2012