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On Sunday 22 March 2020, the Government announced a number of temporary changes  to super as part of its economic response to the coronavirus. The proposed changes are:

  • Supporting individuals affected by the coronavirus by allowing access of up to $10,000 of their super in 2019-20 and a further $10,000 in 2020-21.
  • Supporting retirees in managing the impact of volatility in financial markets by reducing minimum drawdown requirements for account-based income streams by 50 per cent for the 2019-20 and 2020-21 income years. Additional support is provided by reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.

These proposed temporary changes are in addition to existing rules of accessing your super and activating your income account.

Temporary early access to superannuation

While super is designed to help people save for retirement, the Government recognises that for those significantly financially affected by the coronavirus, accessing some of their super today may outweigh the benefits of maintaining those savings until retirement.

The Government proposes to enable eligible individuals to apply online through myGov to access up to $10,000 of their super before 1 July 2020, and also access up to a further $10,000 from 1 July 2020 for a limited period (proposed to be approximately three months depending on the passage of relevant legislation).

Eligibility

Eligibility will be managed by the ATO, with applications made directly though the myGov website. To apply for early release you must satisfy any one or more of the following requirements:

  • you are unemployed; or
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020: you were made redundant; or your working hours were reduced by 20 per cent or more; or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

People accessing their super will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. For more information, refer to the Government’s Early access to superannuation fact sheet.

It is proposed that this change will commence mid-April 2020 which will require a change to enabling regulations as well as super funds’ systems and processes.

If you are think you might be eligible and will apply for this early release of your super it is important to know that we will require appropriate proof of identity documentation to enable any payments from your super.

Temporary reduction in minimum draw down rates for account based income streams

In a similar move that was implemented following the Global Financial Crisis, the Government is proposing changes to reduce the minimum draw down rates, reducing the need for retirees to sell down investment assets, enabling them to better manage the impact of the current volatility in financial markets. The Government also announced a reduction to the upper and lower social security deeming rates.

In summary, the Government proposals are to:

  • Reduce superannuation minimum drawdown requirements for account-based income streams (and similar products) by 50 per cent for the 2019-20 and 2020-21 income years.
  • Reduce both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.

For more information, refer to the Government’s Providing support for retirees fact sheet.

Not sure what to do or need help? Let’s have a chat

We understand that the coronavirus outbreak has created a period of uncertainty and you may be nervous about the impact this may be having on your super. We exist solely to look after you as part of our membership community. If you’re not sure whether you should be acting on some of these temporary changes or what it might mean to your future retirement, then contact us.

Look after yourself and those that you care about, we’ll take care of your super.