Can you withdraw your super if you're out of work due to COVID-19?
Since this story was published, the government has introduced new hardship measures to allow Australians early access to super.
The coronavirus is the latest blow to those already struggling financially, but what does it take to access your super early?
In the case of severe financial hardship, where you cannot meet your living expenses, you may be granted an early release of super but there are very specific rules around accessing it before you reach the preservation age.
As well as proving financial hardship, which includes the ability to pay for reasonable and immediate living expenses, you need to have been on Centrelink benefits for 26 weeks.
If you then qualify for early access the minimum amount that can be paid is $1000 (unless your super balance is less than $1000) and the maximum amount is $10,000.
In addition, you can only make one withdrawal from your super fund because of severe financial hardship in any 12-month period.
Super may also be released on compassionate grounds — to pay for unpaid expenses, which could include a loan repayment to prevent you losing your home, medical treatments for you and a dependant, modifying your home or vehicle because of a severe disability, or funeral expenses.
For those who meet the criteria or need to access super for any of these reasons, MoneySmart recommends contacting a financial counsellor to help you understand your options, how to apply for your super, and managing other expenses you might be struggling to manage such as housing and bills.
Super funds receiving more enquiries
More Aussies have been asking about accessing their super early since the coronavirus outbreak, says AustralianSuper spokesman Stephen McMahon.
While members still need to meet the requirements, AustralianSuper is prioritising financial hardship claims.
"This is similar to the approach we took after the recent bushfires and similar natural disasters that have happened in various parts of Australia," McMahon says.
A Media Super spokesperson told Money they are receiving a small number of enquiries from members regarding accessing super due to the financial impact of the coronavirus.
"This is unfortunately not unexpected and enquiries are likely to increase with time as our membership is likely to be disproportionately impacted - many of our members are freelancers/self-employed and many work in the entertainment and arts sectors, where we're already seeing loss of income due to event and performance cancellations and venue closures."
"We always do our best to support members where we can, but it's likely many people will not be eligible for early access to their super.
The Federal Government's stimulus package does not cover a lot of sole traders, which includes freelancers and the self-employed.
"We encourage people to find out what support may be available through Centrelink or even their industry's union; if people have loans and mortgages they're concerned about, they should speak to their financial institution to see what arrangements can be made during these exceptional circumstances."
Financial adviser Anne Graham says accessing super early is fraught.
"Even if there were no conditions attached you have to weigh it up: if you take it out now, you're taking it out at a low point in the market and crystallising any loss," she says.
"But if you're young and you need it and it's a low balance, you will have time to make it up."
Other reasons for early release
You can also apply for early release of super in the event of a terminal medical condition.
If your fund does not allow access due to terminal illness, you may be able to move your super to a different fund.
You may be also able to access your super if you are permanently incapacitated. This type of super withdrawal is sometimes called a disability super benefit.
Your fund must be satisfied that you have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do by education, training or experience.
At least two medical practitioners must certify this for you to receive concessional tax treatment.
We're cutting through the confusion to help you manage your money during the coronavirus outbreak. Click here for more on how COVID-19 could affect your job, budget, super and investments.