Withdraw or not to withdraw

A national emergency is no time for an attack on retirement savings, wrote Paul Keating in the SMH.

I recall some time ago speaking to the Assistant Minister for Superannuation who advised that the most common request and complaint was from members who wanted to withdraw money from their super to pay for things such as mortgages, school fees and credit card debt. It is easy to understand why a family or individual struggling under debt would make such a request. But the Assistant Minister’s view was clear: super is for retirement purposes only and if we start allowing access to super for various other reasons we defeat the purpose of it.

However, due to the COVID-19 pandemic and its massive economic ramifications, the Federal Government has put in place measures to allow individuals affected by the pandemic to access up to $10,000 in the current financial year (before 1 July 2020) and another $10,000 from 1 July 2020 to 24 September 2020.

People will not need to include these payments in their income tax return and will pay no further tax on the payments. To access early release payments, you need to meet one or more of the following requirements:

  • you are unemployed
  • you are eligible to receive a JobSeeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance

On or after 1 January 2020, either

  • you were made redundant
  • your working hours were reduced by 20 per cent or more
  • for sole traders, your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Your financial situation will determine whether you wish to access this scheme and it is always prudent to obtain financial advice from a licensed financial planner. The Australian Taxation Office warns of various scams that are popping up offering to assist in making withdrawals for a fee. The ATO also advises not to provide your personal information if you are contacted and not to click on any links.

“A national emergency is no time for an attack on retirement savings,” wrote former Prime Minister Paul Keating in the Sydney Morning Herald on 13 April 2020. Keating refutes a proposal to suspend the current 9.5 per cent compulsory super contributions during the pandemic.

“Many people do not know, or understand, that individual member superannuation contributions represent but 20 per cent only of an accumulation at retirement,” Keating said. “That the other 80 per cent comes from compound earning in the fund.”

Industry Super Australia has provided some useful modelling to help you see how any present withdrawals will affect your account balance at retirement: industrysuper.com/super-to-help/accessing-your-super-now/

“We are all in this together” has become the new mantra during these difficult times and NGS Super is here to assist you. Information regarding the pandemic, investments during this period and how to access early withdrawal of super is available at www.ngssuper.com.au

We extend our best wishes to you and your family – stay well, stay safe, we are here to help.

Bernard O’Connor
NGS Super Company Secretary/Manager Insurance and Complaints
(Important information: The information in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances, read the Product Disclosure Statement for any product you may be thinking of acquiring and consider seeking personal advice. Past performance is not a reliable indicator of future performance. Any opinions are those of the author and do not necessarily reflect the view of NGS Super.)