SUPERANNUATION, TPD & OTHER RELATED MATTERS COLUMN
PERMANENT INCAPACITY CLAIM v FINANCIAL HARDSHIP CLAIM
What if you can’t wait for a decision to be made on your TPD claim and you need money now. There are other options available to you.
Permanent Incapacity Claim
If you are suffering from a permanent incapacity, through either injury or illness, you may be eligible to access your superannuation benefits early (these are the contributions made by your employer and/or yourself).
You will need to contact your superannuation fund to obtain the relevant claim forms.
In most cases, you will need two different legally qualified medical practitioners, one of which must be a specialist medical practitioner within the field of medicine related to the illness/injury causing your incapacity, to certify that, due to ill-health (either physical or mental), you’re not likely to be gainfully employed in a capacity for which you’re reasonably qualified.
Please be aware that you must leave the minimum amount (you will need to seek this advice from your superannuation fund) in the account so that it does not affect your TPD claim, if you have one.
Financial Hardship Claim
If you are suffering from severe financial hardship, you may be able to access your superannuation benefits early.
Most major superannuation funds will permit benefit withdrawals for financial hardship. We recommend that you check with the super fund first to see if they permit access on the grounds of severe financial hardship.
You must satisfy certain conditions for early access to super benefits based on ‘severe financial hardship’, which are outlined in a special regulation of the Superannuation Industry Supervision Regulations 1994.
You can claim your super benefits early based on severe financial hardship, if you satisfy one of the following two scenarios:
- Received income support from Centrelink for a continuous 26 week period, and cannot meet immediate expenses. You can access up to $10,000 of your super benefits in each 12-month period.
- Reached age 55 (current preservation age) and received income support from Centrelink for a continuous 39 week period. You can access full super benefit if required.
Scenario number one above is the most common scenario. In that instance you will need to prove the following to the Trustee of the Superannuation Fund:
- You have received Commonwealth income support payments for a continuous period of 26 weeks. You can confirm this with written evidence provided by Centrelink who is responsible for the income support payments.
Income support payment includes NewStart allowance, Disability Support Pension, parenting payment, carer’s payment, and widow allowance, but in this instance, does not include Ausstudy payments, or Youth Allowance paid to students in full-time study;
- You are unable to meet reasonable and immediate family living expenses.
If the trustee of your Superannuation Fund considers that you satisfy the above requirements, you can access up to $10,000 in each 12-month period, and a minimum of $1,000 (unless your super benefit is less than $1,000 and then you must withdraw the entire amount).
Note: The letter or form from Centrelink confirming your income support history must be dated no earlier than 21 days before you submit your application for early release to super fund. In other words, be sure to make your application as soon as possible after receiving written confirmation from Centrelink about your income support.
Another Type: Compassionate Grounds
If you do not meet the conditions required under “severe financial hardship” then in some very specific circumstances, the law allows you to access your superannuation before you are 55 years old. These circumstances are called “Compassionate Grounds”.
Some of these Compassionate Grounds include:
- if you or your family have significant medical costs (including medical transport, or costs for house or car modifications due to disability);
- if you are at risk of your house being sold by your mortgage lender;
- if you need to pay for palliative care; or
- to help with funeral expenses for a dependant.
To apply, please visit the Centrelink website and select the form or forms applicable to the compassionate ground(s) on which you will claim against.
Once you complete application form return it to the Department of Human Services for approval. If you need help filling out the form or more information please contact the Department of Human Services.
If your application is approved you will receive a letter of approval from the Department of Human Services.
You will need to complete an Early release of super on compassionate grounds form from your superannuation fund and forward it together with your letter of approval from DHS (or a certified copy).
Warning: You may not be aware that if you are permitted to access your superannuation benefits, then benefits tax is likely to be deducted from the super benefit before it reaches your hands. We recommend speaking to an accountant or your superannuation fund prior to accessing your benefits.