Australian Separation and Divorce Articles

How to access your
superannuation funds early

Single parents in financial hardship

Grace Lawson – Barrister-at-Law | 19 October 2014

Accessing your superannuation funds early

Not many people are aware that superannuation funds can be accessed early on grounds such as compassionate grounds or financial hardship…

Financial hardship does not discriminate. Many of us at some time in our lives experience the uncertainty and fear that comes with the lack of money to meet our basic living expenses. Parents, and especially single parents, will agree that this uncertainty and fear is magnified when there are children involved.

Meeting the most basic living expenses on a single income is one of the biggest challenges a single parent will face. Rent, utility accounts, phone bills, school fees, uniform expenses, and medical bills are just a few of the usual household expenses. Single parents may struggle to buy food with the money that is left over. There is usually nothing left for entertainment or treats for your children.

Improving your financial position may take some time. For example, you may not be able to undertake ‘that’ TAFE course to apply for ‘that’ position because currently you can’t afford the tuition fees. Or, the budget that you set up (or that a financial organisation set up for you), may take months or years to get you debt free or get you ‘those’ savings.

For advice on budgeting, saving, and debt management go to the Moneysmart government website here.

So what do you do when you are on the verge of having your home repossessed because you can’t meet your mortgage repayments, or getting evicted because your rent is in arrears, or when your child desperately needs medical or dental treatment?

Determining how much super you have

Not many people are aware that superannuation funds can be accessed early on grounds such as compassionate grounds or financial hardship. There are advantages and disadvantages of accessing your superannuation funds early, so make sure you consider your options before proceeding.

If you decide to proceed, then first check how much superannuation you have. If you have had several jobs over the years and have lost track of the superannuation funds you were with, then go to the ATO website to attempt to locate your lost superannuation. Once you have done that, learn how to roll all of your superannuation into one account.

If you are a single parent who has not worked (whether because of illness or being the primary carer of your children) then you will most likely not have much, or any, superannuation. However, if you were married, or in a de facto relationship, and you separated, then you could be entitled to a property settlement with your former partner. A property settlement includes the division of assets such as properties, savings, furniture, as well as superannuation. You may need to obtain legal advice about your property entitlements (if you cannot afford a lawyer then see the free legal services listed in this Divorce Directory article).

If you have no significant assets for division but your former partner had superannuation, then you may still divide their superannuation entitlements. This means that a portion of their superannuation will be rolled over into a superannuation account in your name. These funds then become your superannuation. You will then be in a position to access those funds if you satisfy the criteria for early access.

Meeting the criteria for early access

There are many superannuation funds and each has its own rules and procedures. Generally, a superannuation fund will allow access to your superannuation on compassionate grounds, or grounds of financial hardship. For example, if your home is about to be repossessed, you may access the equivalent to 3 months mortgage payments plus 12 months interest on the outstanding mortgage balance, provided you have that much in your superannuation account.

Your application needs to be supported with documents. Be prepared so that your application can be processed quickly. If you have all of the documents ready you will save yourself time. The documents that you will need will depend on the ground you are applying under.

For example, if you are applying to access your funds because your rent is in arrears and you may be evicted, then you may need to have the following documents:

A current tenancy agreement with your name on it
Evidence of how much rent is outstanding
Letters from the agent stating that you may be evicted
Evidence of your current earnings, such as pay slips, or letters from Centrelink
If you pay child support, how much you pay and to whom
A list of your debts such as credit cards
A detailed list of all of your living expenses

In essence, what you need to show is that you are not able to pay your rent and are about to be evicted. If your expenses are reasonable and higher than your income, then you will most likely meet the criteria for early release of your funds.

If you are applying to access your funds to pay for your child’s medical or dental treatment, then you may need to have the following documents:

A letter or report from your child’s general practitioner or dentist stating that your child is suffering from acute (or chronic) pain and the treatment is not readily available through the public health system, and the cost of the treatment;
A letter from a medical or dental specialist stating that your child is suffering from acute (or chronic) pain and the treatment is not readily available through the public health system, and the cost of the treatment;
Evidence that the child is your child and your dependant;
Evidence that you do not have the funds or the savings to pay for the treatment;
Evidence that you do not have private health insurance that will cover the cost of the treatment.

Remember that pain is subjective and although most adults would not consider a medical or dental condition to be painful, it may be causing pain to your child. There are many conditions that children suffer from which can be treated. Talk to your doctor whether the treatment that you thought you would not be able to afford may now be possible with access to your superannuation funds.

Where to lodge your application

Generally applications on compassionate grounds are lodged with the Department of Human Services (DHS) and not with your superannuation fund. Applications on grounds of financial hardship are lodged with your superannuation fund, and not with DHS.

Check with both the DHS and with your superannuation fund as to who you should lodge your application with. Explain in detail the ground you are applying under, for example, to pay rent arrears, for mortgage assistance, or medical expenses. You will be advised whether you need to lodge your application with DHS or your fund, and you will be provided with all the documents and forms that you need to support your application.

If you are about to be evicted or your home is about to be repossessed, and you have decided to make the application for early release of your superannuation funds, immediately contact your agent or mortgage lender (by phone and in writing). Advise them that you have applied for early release of your superannuation funds and request that no debt enforcement action be commenced against you while your application is being processed.

Finally, if your application is being considered longer than expected, pick up the phone and telephone the DHS or the superannuation fund. Politely ask what you can do to speed up the process of your application. It may be that your application was inadvertently misplaced.

Accessing your superannuation funds may not be your preferred option to meet your urgent expenses. However, to a single parent who is struggling financially it may that ‘lifesaving’ option they didn’t know they had.

Grace Lawson is a Barrister and Mediator in Brisbane and practices in the areas of family law, employment law, and personal injury law. Grace mediates disputes in all areas of law. For contact details see Grace’s website at www.gracelawson.com.au.

Liability limited by a scheme approved under professional standards legislation.