Updated: Mar 31
UPDATE - 5:05pm 31/03/2020
You can apply for early access to super through MyGov from Monday 20 April.
How do I apply?
Your can register interest with the ATO now by logging into your myGov account and following the ‘Intention to access coronavirus support’ instructions.
The ATO will then notify you by email or SMS when applications for early access open.
If you don't already have a myGov account, you will need to'Create an account'.
You should also get in touch with your Superannuation fund, and make sure your Personal Details are up to date including ensuring they have your preferred bank account on file to make the release payment.
If you are a client of Lime's please let us know as soon as you register your ‘Intention to access Coronavirus support’.
NOTE: You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.
Withdrawing your superannuation may affect your existing Life, TPD or Income Cover.
This may occur if your account is fully withdrawn or the balance falls below $6,000.
Where can I find more information?
Via the ATO website.
This information is current as at 26/03/2020 at 9:00am.
What we know so far about the $10,000 Super withdrawal:
It is not available until mid-April, you cannot do it yet.
To access your superannuation, you will have to apply via the ATO Portal on the MyGov Website. It is not done via your Superannuation fund or your financial adviser.
You will need to notify your Superannuation fund, however, of your bank details (i.e. where you want the money to go).
You may need to notify your adviser about your intention to withdraw so they can work with you to sell down the correct investments to release the money and mitigate the impact on your portfolio.
Important note for Self-Managed Super Fund Trustees: The ATO has provided no guidance as to how you will handle this as yet so please do not make any withdrawals.
In order to access the benefit you will need to complete a self-declaration that you are
· currently unemployed
eligible to receive the individual income assistance
· JobSeeker Payments
· Youth Allowance for Jobseekers
· Parenting Payments (single and partnered)
· Farm Household Allowance
· Special Benefits
· made redundant on or after Jan 1st 2020; or had their working hours reduced by 20% or more
· A Sole traders who has had business suspended, or have had a reduction in turnover of 20% or more.
Important considerations in withdrawing your super early
Withdrawing Super early is never a decision to be taken lightly and should be a last resort.
Remember: You are ‘selling’ at a loss. Investment losses are only real when you sell or crystalise them. By withdrawing from your Super you may be selling out of the shares and property investments within your fund.
For example - Jane has $100,000 in her Super. However, it’s recently dropped 20% to $80,000 due to the economic downturn. If Jane withdrew $10,000 after her Super had fallen 20%, that money would not be there to rebound in the market - which is a material loss of $2,500 after the market bounced back. If Jane foregoes all future returns on that $10,000 at 35 years of age, she will miss out on an additional $67,000 of returns by retirement at 65 (assuming a 7% rate). That’s a lot more than $10,000.
A lot of Australians will be withdrawing their super in one go, this is going to cause huge delays in the super system, particularly for group or industry funds.
Group or industry funds may also have issues with liquidity, this policy could impact your investments ability to return, as these super funds may have to sell assets at a loss to return this money.
If you have a WRAP account with an Adviser (such as Asgard, Macquarie, BT or Netwealth) you may not have this issue as your investments are not pooled in the same way, and we can choose which investments to sell. We have likely discussed this before in reference to the GFC.
Difficulties we see with all of this process
We have no idea what requirements super funds will put in place to release the money such as whether: your super fund will need signed forms posted (a lot of funds still work this way), or need some form of certified ID provided (and how will you obtain that in isolation.)
At this stage Super funds will need to manually process these payments. They are currently struggling to deal with the inflow of phone calls right now, let alone administer these payments.
The withdrawal is no available until mid-April and there are a LOT of people that qualify. This could mean it could be weeks until your money is actually released due to the backlog.
We are also unsure how this will effect your investment performance – the sheer volume of money that could be withdrawn could compromise the Superannuation portfolios of a lot of Group and Industry Super funds.
We understand and empathise with the pressure that many people and families are under in these trying times. If you require financial advice or quite frankly are just a little lost with this, and unsure if you should be withdrawing from your super, don’t hesitate to reach out.
Here’s how you can contact us:
Book a video or phone appointment here.
Call us on 03 9801 882 or email firstname.lastname@example.org.
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