Government announcements regarding superannuation and pensions
On 22 March 2020, the Government announced a further package of relief measures to assist individuals and businesses in mitigating the negative economic impacts of the Coronavirus pandemic.
Temporary early access to superannuation
The Government has recognised that short term availability of income may temporarily outweigh the stated purpose of superannuation as a retirement savings vehicle. The measure allows temporary additional early access to super savings in prescribed circumstances. People who meet the criteria will be allowed to access:
- up to $10,000 of their super before 1 July 2020, and
- up to an additional $10,000 in the three months starting from 1 July 2020 (timeframe is approximate and subject to legislation).
Amounts released under these rules will be paid tax-free and will not affect Centrelink or DVA (veteran) payments.
Individuals eligible to apply for early release include:
- The unemployed
- Those eligible to receive the Jobseeker Payment, equivalent Youth Allowance, Parenting Payment, Special Benefit or Farm Household Allowance
- People who on or after 1 January 2020:
- Were made redundant
- Had their working hours reduced by 20% or more
- As a sole trader, their business was suspended, or turnover decreased by at least 20%.
Those eligible must apply to the ATO through the MyGov website and self-certify that they meet the requirements. The ATO will then process the application and issue a determination to the applicant and their super fund. The super fund will be able to pay the applicant directly.
Those eligible will only be allowed one withdrawal application in each period. Therefore, the applicant is not able to request an additional or top-up amount, even if the initial payment was less than the maximum of $10,000.
Applications for early release of super under this measure are expected to commence from mid-April 2020, approval and benefit payment time frames have not been announced at the time of writing.
Early release of super benefits under this measure will also be available to members of self-managed super funds.
Accessing super benefits in times of market downturns is usually not recommended as it may crystallise losses. However, members who experience loss of employment or a significant decrease in income may find this measure provides immediate financial relief and the basis to re-build.
Support for retirees – temporary reduction in minimum pension drawdown requirements
The Government has proposed a 50% reduction in the minimum income drawings required from account-based pensions and similar products for the 2019/2020 and 2020/2021 financial years. A similar measure was available following the 2008 Global Financial Crisis.
People whose circumstances allow can reduce income payments from their superannuation-based pensions or income streams. The purpose is to delay the need to sell-down assets in depressed markets.
Those who have already taken 50% or more of the required minimum payment in the 2019/2020 financial year could cease any further payments until 30 June (subject to the passage of regulations/legislation).
This measure is not compulsory. Individuals who need the income or do not wish to reduce their income payments need not take action.
Superannuation pensioners who are funding their income requirements from a cash account may also decide to take no action.
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