Early withdrawl of Super - is it possible

[MarkR]

Hi,
I did a search but didn't find much on early withdrawl of super.
My wife has about $5k in Super & would like to withdraw it to pay of her credit card. We've got 2 kids (one of them a 6 month old) so she's not planning on going back to work anytime soon. I'm full time employed & when we've previously contacted the 'super dept' they stated only if she leaves the country permanently or if we're suffering 'financial hardship' can she access it.

Any suggestions on how we can withdraw her Super ?

Thanks

Mark

 

[kissfan]

Hi Mark.

Don't know exact circumstances, but I have heard of a tenant that was behind in rent (& possibly a few other payments) that got access to some of their super to help with backlog of payments.

Regards
Marty

 

[geoffw]

I'd be really surprised if it were at all possible.

People were once able to access super when they changed jobs (this is how I financed a trip to Mexico to see the lovely lady I married once upon a time)- but now super is generally restricted for the purpose for which it's really intended- retirement.

 

[kissfan]

I'd be really surprised if it were at all possible.

but now super is generally restricted for the purpose for which it's really intended- retirement.

My thinking is the same Geoff.

What I posted above (re tenant getting access to super), was conveyed to me by a PM, and recently as well.

I didn't think it would be possible (and still have my doubts).

PM may have twisted the facts

Regards
Marty

 

[MarkB]

I'd love to get my hands on my Australian super, but I really cannot see it happening.

This ASIC website tells you about the alternatives available, but the juicy bits are:

You can get your super earlier only if you:

- suffer permanent incapacity for work, or
- possibly in cases of severe financial hardship, or
- on 'compassionate grounds'.


Severe financial hardship

Contact your fund. If the rules allow early release of benefits, you must satisfy the trustee that you have been receiving a Commonwealth income support payment for a continuous period of 26 weeks and you cannot meet your reasonable and immediate family living expenses.

Compassionate grounds

Contact your fund. If the rules allow early release of benefits, the 'compassionate grounds' are set out in the law. The Australian Prudential Regulation Authority (APRA) must consider your application first, before your fund trustee can make a final decision.

Compassionate grounds involve medical treatment for serious conditions that is not readily available through the public health system, transport for medical treatment, changes to a home or vehicle because of a severe disability, palliative care, funeral and burial expenses, or to prevent the forced sale of your home by your mortgagee.


Mark

 

[DCA]

Forget about accessing your super, it would be close to impossible unless you are starving and cant feed your kids .
Start managing your debt and stop using credit card is a better long term solution.

1. start paying your credit card debt the minimum amount required
2. Cut your spending by 5-10% (maybe 1 less coffee a day, not eating out, or go and see that movie,do what ever you need to do) and dump that 5-10% on the credit card debt.
3. do that for a few months then your mind start to get into the habbit and you dont miss that 5-10% any more, your credit card debt will start to go down slowly then try and cut another 5-10% after you got used to the initial habbit and dump that on the credit card again.
4. repeat the process until your credit card debt is clear and dont put any more debt on it then cut the damn credit card up
5. you start having those excess 10-15% when the credit card debt is gone. Save it and invest and dont waste it on the credit card again
6. come back here and learn on how to invest, read on manage funds, stock markets what ever you can get your hand on, read afr.com etc..
7. many years down the road you be well off and can pay everything with cash no more credit card debt.

 

[redwing]

I thought you could "always' access the non-preserved amount in your super, I also thoughtthat you would incurr taxon the withdrawal (not sure if it's 15% or the top tax rate though)

Be interested to hear from someone who deals with this type of Investment on a daily basis

 

[geoffw]

I thought you could "always' access the non-preserved amount in your super, I also thoughtthat you would incurr taxon the withdrawal (not sure if it's 15% or the top tax rate though)

Non-preserved- is that the super accrued before the change in regulations? Those regs have been in place for quite a number of years now, I'd be guessing that Mrs MarkR wouldn't have very much of that at all.

 

[MarkB]

I thought that the "non-preserved" bit was the employees own contributions (where applicable) to their superannuation. I could be wrong.

I can't speak for anyone else but I have never put a dollar more than I had to by law into my super-funds.

Superannuation is legal highway robbery in my book.

Mark

 

[MarkB]

I thought that the "non-preserved" bit was the employees own contributions (where applicable) to their superannuation. I could be wrong.

I am a dill.


According to ASIC:

Preserved and unpreserved benefits

When you leave a job, you'll probably have to keep most of your accumulated benefits in a fund. Any money contributed after 1 July 1999, including investment earnings, must be kept or 'preserved' within super. (Some employer-financed benefits before that date may also have to be preserved.)

Your latest annual statement or your fund can tell you if you have any 'unpreserved' amounts. You can still roll these over into your new super fund which can really boost your retirement savings. If you withdraw them to spend or invest outside super, you may have to pay extra tax.


Mark

 

[MarkR]

Pitt St "Superannuation is legal highway robbery in my book." I'm with you on this one, my Dad always reminded me how in NZ (50's I think) they made super compulsary using Govt funds & allowed additional contributions. Then when the Govt got in trouble they decided the Super fund was really 'Govt' money & took it all INCLUDING his additional contributions ! What the Govt gives the Govt can take away...people forget that when they plan long term with Super...oh yeah & the returns are rubbish !

DCA - don't be so condescending, it smacks of arrogance & made me want to reach through the monitor & slap you

 

[MarkR]

DCA - Apologies for 'over-reacting', currently tired & stroppy due to illness amongst all at home (incl. myself) & rubbish annoying me at work so took your well meaning advice as a bit insulting when it was obviously meant in a helpful manner.

Just to clarify, we're financially semi-intelligent (not running at 100% but operate at about 80%) so there's not many corners to cut. This was just going to pay off the card immediately & save about $1k in interest as well as freeing up the 5% earlier for investing savings.

Rather than modify my post I thought I'd make the apology public given I reacted rather badly publicly.

Cheers
Mark

 

[DCA]

I thought that the "non-preserved" bit was the employees own contributions (where applicable) to their superannuation. I could be wrong.

I can't speak for anyone else but I have never put a dollar more than I had to by law into my super-funds.

Superannuation is legal highway robbery in my book.

Mark

Superanuation is your money, no one can take that away from you, not the government or anyone else, only you legally has access to that money.
I think Superannuation is a good thing, it's a force saving habbit and it take the burden away from the social system.
Without super, most people cant displine themselves to save and end up with nothing when they retire and end up going on to centrelink payment, that will put load on your children and grand children tax burden.

But again that a decision each one of you will make whether it is a good thing for you to do or not.

 

[duncan_m]

Superannuation is legal highway robbery in my book.

I agree.

I consider Superannuation another form of taxation..

Where once simple folk worked and paid taxes in the expectation of drawing a small pension in their retirement they are now expected to fund their own pension through their working lives (and continue to pay tax). Whilst the Employer pays the lions share this could well have been money they could have received in the form of higher wages..

 

[redwing]

On Compulsory Superannuation..

Wasn't the Goal to be at about 14% by now..with the employer and employee both contributing?

And what Superannuation % are they at in other countries such as Singapore, Japan etc..I've heard its a lot more than in Australia..

 

[duncan_m]

And what Superannuation % are they at in other countries such as Singapore

I believe Singaporeans contribute 25% of their wages to the Central Provident Fund.. I understand this is for their retirement but also can be used to fund housing and education.

 

[kierank]

Superannuation is legal highway robbery in my book.

I don't totally agree with this.

My wife and I have my own business (to generate cash), our own SMSF (to invest in the stock markets thru direct shares and managed funds) and hybrid trusts (to invest in property).

We both turn 50 this year - so, if the business can afford it, we are able to contribute $200,000 pa into our SMSF and only pay 15% tax (if we paid ourselves, we would lose nearly half of it in tax; if we leave the money in the business, we would lose 30%). So, we get to keep a minimum of $30,000 pa this way.

We use this money to buy and sell stock market investments - income is taxed at 15% (can be reduced by using dividend imputation) and capital gain is taxed at 15% (reduced to 10% if asset is kept for 12 months). If we did this in our own names or thru trusts, income would be taxed at nearly 50% (can be reduced by using dividend imputation) and capital gain is taxed at nearly 50% (reduced to nearly 25% if asset is kept for 12 months). We are not day traders but we do buy and sell shares on a regular and frequesnt basis (typically we do not keep shares for 12 months). So, we keep a lot more money (which is compounding) by using our SMSF.

In 5 years times (age 55), we are aiming to stop work. Our SMSF will switch from accummulation stage to pension stage. This will allow us to withdraw a lumpsum of over $250,000 tax free (today's limit) plus ALL income and capital gains will be tax free forever.

As well, we will probably sell our business. If we do, the sale will be CGT free (claiming the 15-year CGT exemption on the sale of a small business). We will roll over most/all of this money (depending on RBLs, etc) into our SMSF as the income will be tax free forever.

At the monent, most of our properties are negatively geared. When we stop work, either:
1. Our pension from our SMSF will be large enough to handle the shortfall or
2. Our property portfolio will be cashflow neutral (wouldn't that be nice) or
3. We will use some/all of the SMSF lumpsum to convert the portfolio as described in 1 or 2 above.

Also, assets held in Super are very well protected from creditors, tenants, etc.

So, I am a particular fan of Super as well as hybrid trusts and companies. They all offer advantages - you need to know the rules with each (or get good advice) and apply each to your goals, your circumstances, your age, your SANF, etc. The important (and probably the hardest thing) is to start with the end in mind.

 

[Rixter]

IMHO the working class are being fed a massive lie from the banking/finance sectors. superCONuation - is more apt.