Accessing your super & income protection insurance during the current health emergency20 Mar 2020
UPDATED 1 APRIL 2020
We understand that many hardworking Australians may be facing tough times in the coming months, as we feel the financial impacts of the coronavirus (COVID-19) health emergency. Many people are wondering if they will be able to access some of their super savings to help relieve the financial strain of lost income, and whether they can claim against their Income Protection insurance.
ACCESSING YOUR SUPER THROUGH TEMPORARY COMPASSIONATE GROUNDS
The Federal Government has announced new temporary compassionate grounds for early release of super, available from mid-April 2020.
Under the new grounds of release, eligible people will need to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. People will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.
Please note, the Australian Taxation Office (ATO) will be assessing these compassionate grounds applications, not Media Super. Members must apply via myGov.
In order to apply for early release under the new temporary compassionate grounds, people must be able to show they satisfy any one or more of the following requirements when they apply:
- they are unemployed; or
- they are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments) special benefit or farm household allowance; or
- on or after 1 January 2020:
- they were made redundant; or
- their working hours were reduced by 20 per cent or more; or
- if they’re a sole trader – their business was suspended or there was a reduction in turnover of 20 per cent or more.
Once the ATO has processed and approved an application for early release on the temporary compassionate grounds, we will be advised to release a member’s funds as soon as practicable. To ensure people receive their payment as soon as possible, the ATO has advised members to check if your super fund has your correct details.
The quickest way for members to check and update their details with us is by logging into their account online and heading to the 'Personal Details' page in the menu. You can update your address, phone, email address, and supply your Tax File Number. Alternatively, members can call the Helpline on 1800 640 886 to update contact details, or send us a completed 'Providing a tax file number' form.
Important considerations before applying
Some members will have lost their jobs or had their hours significantly reduced, and many freelancers have seen a significant reduction in their income. Media Super is working to support our members through this tough time but we also want members to carefully consider all of your options for assistance and the full impact of withdrawing money from your super.
Withdrawing $10,000 or $20,000 can have a substantial impact on your retirement savings down the track, with youngers members standing to lose the most over their lifetime.
|Age||Starting balance||Super taken||Difference at retirement*|
*Scenarios modelled by Industry Super Australia (https://www.industrysuper.com/campaigns/coronavirus-and-your-super/) and based on a 7% p.a. return over the longer term (this return is a typical estimate for a Balanced super investment option).
Members should also consider that withdrawing super now is like selling a house at the bottom of the market – you’ll lose money you would probably claw back overtime.
The Federal Government has announced economic stimulus packages to help individuals, businesses and sole traders.
The JobSeeker payment is available to people who have lost permanent employment, sole traders and the self-employed, casual and contract workers who meet the income test.
The JobKeeper payment will provide a wage subsidy to eligible businesses to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months.
We encourage our members to find out what support may be available to them through their employer, Centrelink or their union; if members have loans and mortgages they’re concerned about, they should speak to their financial institution to see what arrangements can be made during these exceptional circumstances.
MoneySmart have developed a step-by-step program to help people with a variety of financial decisions during the COVID-19 health emergency, which may also help members evaluate their options and make decisions.
We understand that for some members it will be necessary to access their super to reduce the impact of financial strain caused by the ongoing health emergency. We strongly encourage members to apply for available Government assistance before applying to access their super. That should be a last resort given the potential negative impact it can have on retirement savings.
FINANCIAL HARDSHIP AND COMPASSIONATE GROUNDS (Non-temporary measures)
Applications for early release of super can still be made under the existing rules for financial hardship and compassionate grounds.
Where people are, for example, facing the possibility of losing their home or have immediate medical expenses, they may be eligible for an early release on compassionate grounds. The Australian Taxation Office makes these decisions (not Media Super), and members need to apply to the ATO directly for early release of super on compassionate grounds.
To access super due to severe financial hardship, a person has to have already been receiving Centrelink benefits for 26 weeks and unable to meet reasonable and immediate family living expenses. Financial hardship applications must be made to Media Super.
CAN YOU CLAIM INCOME PROTECTION INSURANCE?
Income Protection cover replaces a percentage of your salary if you are unable to work for an extended period of time due to illness or injury, and you are either totally disabled or partially disabled.
There is a waiting period under the policy, which means you need to be off work for at least 30 days (the minimum waiting period available) due to illness or injury before being eligible to claim an insurance benefit. Some members will have waiting periods of 60 or 90 days. Benefits become payable from the end of the waiting period and after your claim has been assessed and approved. Other terms and conditions may apply.
You will not be able to claim against your Income Protection if you have lost your source of income due to public health measures or business/workplace closures related to coronavirus (COVID-19).
WE'RE HERE TO HELP
We understand these are uncertain and difficult times and, as always, will do our best to support members where we can.
If you have questions about accessing your super or making an insurance claim, please contact the Helpline on 1800 640 886.