Accessing Superannuation To Clear Mortgage Arrears
The majority of people are unaware that, in specific situations, Superannuation is accessible before retirement age.
Superannuation is designed to assist with the funding of your retirement, and as such, any early release of Superannuation, is purposefully restricted. Under specific circumstances and criteria, DHS and/or your Super Fund, may approve an Early Release of Superannuation Benefit (ERSB) before reaching your preservation (retirement) age. In these circumstances, should any benefit payment be made to you, taxation may be withheld by your Super Fund, and reported to the Australian Taxation Office (ATO).
Generally, early access to Super or ERSB, falls into the following general categories:
– Financial Hardship, whereby there has been a minimum of 6 months continuous un-employment (registered via Centrelink). This is managed by Centrelink and approved by your Super Fund;
– Terminal Illness, whereby there is the likelihood of the medical condition limiting life expectancy to within a 2 year period. This is managed and approved by your Super Fund;
– Compassionate Grounds Medical Assistance, being extended ill-health and treatment related, approved by DHS;
– Compassionate Grounds Mortgage Assistance, being mortgage arrears help on your Principal Place of Residence, also approved by DHS.
Refer the Australian Government DHS website links:
– https://www.humanservices.gov.au/customer/services/centrelink/early-release-superannuation ; and
Compassionate Grounds, Mortgage Assistance
The DHS ERSB category Compassionate Grounds Mortgage Assistance, provides for assistance to protect your Principal Place of Residence (PPR) when threatened with security enforcement by your mortgage lender. DHS Approval may be subject to ensuring that you have exhausted all other avenues of paying your Arrears, before Approving any access to your Super.
We have been able to assist many clients in accessing their Superannuation under the DHS ERSB Mortgage Assistance programme, in order to preserve the family home.
However, there are strict guidelines and rules that must be met and/or complied with, in order to be successful in this process. This process has over the past year or so, moved to be more rigorously controlled, and we believe, rightly so.
A good use of your Superannuation?
We have been made aware of situations where, over the years, individuals have accessed their Super multiple times, in order to save their home. To us, this flags bigger problems/concerns, which I am confident, many in the superannuation and banking fraternity, and at DHS, would agree. Super is for retirement, not for making your ongoing mortgage payments. It is designed to be a one-off access, to support you through a difficult period.
In instances such as these, we would suggest repeat or multiple Super accesses under the Mortgage Assistance programme, may not be the most appropriate solution. There are other options.
We can assist in these processes outlined above. We do however, always encourage those who are capable, to undertake the Application process themselves, and whilst may be time consuming, it is free.
Superannuation is Complex – Appropriate Qualified Advice Should be Sought
There is no doubt Superannuation is a complex issue, and constantly changing. We highly recommend you talk directly to your Super Fund, DHS, your Financial Planner and/or your Accountant for advice specific to you, your current situation and needs.
We offer our services to review your current circumstances, your wants and needs, and based on our extensive experience, can outline your viable options. We are always happy to spend 15-30 minutes to discuss your matter (P | 1300 732 040).
Sue McCormick, Managing Director