Australians affected by devastating bushfires and farmers affected by drought should be allowed early access to super assets to help them through trying times, say some financial experts.
According to the Australian Tax Office (ATO), there are very limited circumstances where you can access your superannuation early, most of which are related to specific medical conditions or severe financial hardship.
Rural SMSF holders could potentially access super assets to help with financial hardship as a result of the current drought or property destruction caused by bushfires, says Practical Systems Super SMSF specialist Bob Locke, whose group had recently seen a rising incidence of such requests for early access to super from clients experiencing hardship.
He told SMSF Adviser that even though there are strict rules around accessing super prior to retirement age, if rural clients could prove severe financial hardship it may be possible to access a portion of super to supplement any emergency payments already being received.
“Super legislation recognises that there can be legitimate situations where release of monies before the intended time may be appropriate,” he said.
“These include compassionate grounds to cover items such as medical expenses, home modifications to cater for disability and housing loan payments to prevent foreclosure; severe financial hardship for amounts up to $10,000 in any year; [and] transition to retirement provided the person has reached their preservation age.
“As an example, farmers who may have been receiving the Farm Household Allowance benefit for at least six months may qualify for severe financial hardship.”
Starting a transition to retirement pension could also be an option to help rural clients through hardship.
“One option for them might be to instigate a transition to retirement payment from their fund to temporarily assist with living expenses until the drought breaks. The intention would be to top up their super balances once conditions return to normal,” he said.
Infocus head of advice George Kovanis also believes the government should consider allowing early access to super for bushfire-affected Australians.
“This is their money they have worked hard to accumulate, and in some cases – if not most – may be all that they have left,” Mr Kovanis penned in a message to the prime minister.
“This is one piece of policy that would receive bipartisan support and that of the community; it would ease the immediate financial burden and would provide some sort of buffer for those who need it most.”
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