Accessing your superannuation benefits can sometimes be a difficult thing to achieve. Usually members must wait until they reach their preservation age, retire or turn 65.
However, what if you desperately need access to your superannuation and you haven’t achieved any of these milestones?
‘Compassionate grounds’ is a condition of release that allows beneﬁts to be released from a superannuation fund if the following conditions are met:
A member does not have the financial capacity to meet an expense
The release is allowable under the governing rules of the superannuation fund
The department of human services determines that the release is permitted
The expenses to be considered cover the following:
Medical treatment or transport (not covered by the public health system)
Modifications to a home or vehicle due to a disability
Funeral for a dependent
Palliative care for a terminal condition
The amount released will be determined by the type of expense being covered. For instance, under mortgage assistance, an amount equal to 3 months of repayments and 12 months of interest on the balance of the loan can be released from a superannuation fund.
More recently there has been an increase in the number of cases approved for medical treatment expenses including bariatric or gastric band surgery and assisted reproductive treatment including IVF treatment. The Government has announced a review of this condition of release to ensure it is in line with the overall purpose of superannuation and the appropriate grounds for release are met.
If a 30 year old withdraws $25,000 from their superannuation fund using the compassionate grounds condition of release, when they reach the age of 65 their superannuation balance will be almost $140,000 less than if they had not withdrawn the initial amount.
It is also important to take into consideration that the amount released will be taxed in the individual’s personal name at their marginal tax rate.
To find out more about your options when it comes to accessing your superannuation, feel free to get in touch with our team.