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On 22 March the Federal Treasurer announced a package of considered, temporary changes to superannuation for people facing significant financial hardship as a result of the coronavirus.

On 22 March the Federal Government announced a package of temporary super measures which reflect the strength of the super system and the fact it was built for the wellbeing and livelihoods of Australians.

The temporary measures for people facing significant financial hardship as a result of the coronavirus include:

  • early release of a limited amount of super for individuals in extreme financial stress, and
  • reduction in minimum super drawdown rates for retirees.

It’s a pragmatic and caring move for a nation under stress. You can find more detail on these measures below.

Now, as always, we recommend you contact your professional financial adviser.

  • On 22 March 2020, the Federal Treasurer announced temporary changes to super for people facing financial hardship as a result of the Coronavirus. This is part of the Government’s Economic Response to the Coronavirus.

    The measures include:

    • Temporary early access to super
      If you meet the eligibility criteria, which includes those who’ve recently lost their job, the government is enabling you to access up to $20,000 from your super over a period of 2 years, $10,000 this financial year and $10,000 in 2020/21 financial year. You won’t be required to pay tax on these amounts, and any Centrelink or Veterans Affairs payments will not be impacted.

      Note: withdrawing super early may have a significant impact on your retirement savings and should be carefully considered. Many are referring to it as a “last resort” option in cases of financial hardship. Read our article Wealth Warning for more information
    • Providing support for retirees
      There will be a temporary reduction in the minimum annual amount that you’re required to withdraw from your super income stream. The reduction in the minimum drawdown rates will apply for this financial year and for the 2020/21 financial year.
  • To be eligible for early release of super you must satisfy any one of the following requirements:

    • You are unemployed.
    • 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.
    • On or after 1 January 2020:
      -  you were made redundant
      -  your working hours were reduced by 20% or more, or
      -  if you’re a sole trader your business was suspended or there was a reduction in your turnover of 20% or more.
    These payments will be tax-free and won’t be assessable when determining your entitlement to Centrelink or Department of Veterans’ Affairs entitlements.
  • You’ll need to submit an application to the ATO. This will be available from 20 April 2020.

    Please note, you can only make one application this financial year for up to $10,000. You will need to submit a separate application next financial year to access the remaining $10,000 by 24 September 2020.

    These are the steps to follow:

    • Sign in to your myGov account at my.gov.au or create one by selecting create an account and authenticate your identity.
    • Complete the application form in ATO Online. If you’re unable to access online services, call the ATO and complete the application over the phone.
    • Certify that you’re eligible to receive the benefit.
    • Review a list of open accounts including the last account balance reported (in most cases that’s 30 June 2019).
    • Input the amount you wish to access from each account (must not exceed $10,000).
    • Input your nominated bank account details (account name, BSB and account number).
    • Authorise the ATO to provide your application to your super fund. They’ll then action the release of you super into your nominated bank account.

    More information is available at ato.gov.au or my.gov.au

  • Applications can be made from 20 April 2020.

  • To find out more about what documents are required, please refer to the application process in your myGov account at my.gov.au

  • No as you will provide this during the application process via the my.gov.au website.

  • Australian citizens and permanent residents are eligible to apply for the scheme. New Zealand citizens with Australian held super are also eligible. Temporary residents are not eligible.

  • The current process for claiming a compassionate release of super will not be affected by this new scheme.

  • The Government is temporarily reducing minimum drawdown requirements for account-based pensions and similar products by 50% for the 2019/20 and 2020/21 financial years.

    Age Default minimum drawdown rates (%) Reduced rates by 50 per cent for the 2019-20 and 2020-21 financial years (%)

    Under 65

    4

    2

    65-74

    5

    2.5

    75-79

    6

    3

    80-84

    7

    3.5

    85-89

    9

    4.5

    90-94

    11

    5.5

    95 or more

    14

    7

  • Yes. This is available to everyone with an account-based pension.

  • Yes. If you are on the standard minimum, or have opted into the new reduced minimum for the 2019/20 financial year, you will automatically receive the reduced minimum from 1 July 2020.

    Further, everyone on a standard minimum or reduced minimum will receive the reduced minimum from 1 July 2020. After reviewing information on this change from the ATO we understand the new reduced minimum rates are the rates intended to be used for all minimum pension drawdown calculations for 2020/2021.

    If you wish to receive a different amount, you can specify the annual amount you’d like paid; however, this must be within the required minimum and maximum (if applicable) limits. You can do this by completing an Update your account details form, or by calling us or your adviser.