26 Aug 2015
Early access to superannuation
There are specific circumstances in which a member can access their superannuation benefits before reaching preservation age, including:
- Terminal illness
- Financial hardship
- Permanent incapacity
- Temporary incapacity
- Compassionate grounds
Bill is 54 years old and has terminal cancer, he is worried about how he will pay his medical costs and is concerned about the burden on his family. Bill’s GP and cancer specialist have certified that his cancer is terminal and he has less than 24 months to live. He wants to access the $400,000 he has in his superannuation fund. Bill therefore applies to his super fund for early release which is granted. Bill can withdraw the lump sum in full or as progressive payments.
Items to consider:
- Lump sum payments for terminal medical condition are tax free to the member and can be used for anything the member desires
- Depletion of future retirement funds may lead to a shortage of funds for intended beneficiaries
- Ability to recontribute may be reduced depending on the age of member
- Possible loss of succession benefits particularly for a surviving spouse.