For most people who have worked since the early 1990’s, money has been paid into a superannuation fund by the worker’s employer, in addition to their weekly wages. These monies are known as Superannuation Guarantee payments and play some role in funding a worker’s retirement. Some workers also make their own voluntary payments into their super to go towards that retirement fund.
Over the years, the way that superannuation monies are handled, their taxation treatment, the age at which the money can be accessed (preservation age) and the permissible uses of superannuation monies before retirement have changed.
However, the need to accumulate superannuation for retirement has never been more important. After all, superannuation monies are for retirement.
Over a person’s working life, their super fund balance can become quite significant. Currently, the amount that employers must pay into a super fund for each employee, equates to 9.5% of the worker’s wage (this percentage changes from time to time). So for example, if you are earning $50,000 per annum, your employer must pay 9.5% (in addition to your $50,000 wages) or $4,750 each year into your super fund.
We’re often asked if you can access any of that money before retirement age (preservation age).
The laws which make this payment compulsory for employers to pay into a superannuation account for retirement also set out the rules for when superannuation money can be withdrawn early. These circumstances are called “conditions of release". In summary, a couple of the more commonly used conditions of release include:
- Permanent Incapacity withdrawals;
- Terminal Illness withdrawals;
- Compassionate Grounds withdrawals; and
- Financial Hardship withdrawals.
For more detailed information on the criteria to access funds early, you should read our article “Under what circumstances can I access money from my Super fund before retirement age?”
Accessing superannuation monies early can be useful to people for a number of reasons including:
- to help save the family home from foreclosure;
- to provide much-needed funds to pay for medical treatment;
- to modify a home to help deal with illness or disability;
- to pay for the funeral of a loved one; or
- to clear some debt or help set someone up for a future without work due to illness or injury.
Whatever the reason, accessing super early should not be done without first seeking some financial and taxation advice.