To assist Australians struggling to make ends meet as a result of the impact Covid-19 restrictions had on our economy, the government is allowing individuals to take an early withdrawal of up to $10,000 from their superannuation prior to 30 June 2020. Additionally, individuals can make another withdrawal of up to $10,000 from 1 July 2020. These withdrawals will be tax free.
To be eligible for the early release of super you must meet one of the following criteria;
You are eligible to receive one of the following
- Jobseeker payment
- Youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice)
- Parenting payment (which includes the single and partnered payment)
- Special benefit
- Farm household allowance.
On or after 1 January 2020 either
- You were made redundant
- Your working hours were reduced by 20% or more (including to zero)
- You were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more.
In terms of future savings, this policy will result in a massive reduction in peoples end superannuation benefits. Remarkably, up to date, $13.5 billion has been withdrawn already. The average withdrawal has been $7473 per person. Therefore, in excess of 1,806,000 Australians have withdrawn money from superannuation.
If the same number of people make similar withdrawals from 1 July 2020, an additional savings will suffer greatly. It will also mean that a lot more people will be reliant on government pensions by the time they retire.
For an individual retiring in 20 years-time, a withdrawal of $10,000 from a fund earning 7% p.a. will cost them $38,697 in retirement funding. A withdrawal of $20,000 will cost them $77,394.
Please think carefully before you decide to cash out superannuation.
If you would like to discuss withdrawing from your superannuation fund with one of our financial advisors please contact our office.