The Federal Government has announced two measures regarding superannuation in order to provide further support to Australians who have been impacted by the Coronavirus pandemic:
- Early access to superannuation
- Providing support for retirees
Below is a summary of the COVID-19 superannuation update which was part of the Government’s second stimulus announcement:
Early access to superannuation
Usually, superannuation benefits can only be accessed once an individual meets a condition of release. The Government is temporarily allowing individuals affected by the Coronavirus early access of up to $10,000 from their superannuation balance for the 2019/2020 financial year, AND a further $10,000 in the 2020/2021 financial year. This will be a tax free payment.
Who is eligible?
To apply for early release, you must meet ONE of the below:
- You are unemployed; or
- You are eligible to receive job seeker payments, youth allowance for job seekers, parenting payments, special benefits, farm/household allowances; or
- After 1 January 2020:
- you were made redundant;
- your working hours were reduced by 20% or more; and
- as a sole trader, your business was suspended or there was a reduction in turnover of 20% or more.
How do I apply?
To apply for an early release payment from your super fund, you will need to apply to the ATO through the MyGov website. We understand this application process will be available in mid-April 2020.
If you have a Self-Managed Superannuation Fund (SMSF), you will need to apply through a separate process which is yet to be announced by the ATO. We will update you on this as soon as it is released.
Providing support to retirees
Similar to the measures taken during the Global Financial Crisis (GFC), the Government is temporarily reducing the minimum drawdown requirements of pension products by 50% for the 2019/2020 and 2020/2021 financial years.
Minimum drawdown rates have been reduced as set out in the table below:
This measure will benefit retirees immediately by reducing the need to sell assets to fund current and future pension payments from their superannuation balances.
Social security deeming rates
Due to the current low interest rate environment, the Government has reviewed and reduced the upper and lower social security deeming rates.
The reduction in these deeming rates will come into effect from 1 May 2020 and will benefit income support recipients and those receiving the age pension.
With Australia’s heightened level of precaution concerning the COVID-19 (Coronavirus), we want to emphasise that we are here to support and guide you through this difficult time of uncertainty and will continue to provide you with relevant updates.
We are here to help. Contact us should you wish to learn more about the COVID-19 superannuation update.