There have been billions of dollars withdrawn from superannuation since the government introduced the early release scheme. It allowed people to access $10,000 for the 19/20 year and a further $10,000 in 20/21 from their funds.

Some people have genuinely needed it because they had no other option. Others have accessed it for a long variety of reasons including that they felt they could do something better with it than leave it in a fund they couldn’t touch for many years.

Like everything, there are often consequences and if you’ve accessed your superannuation via this scheme. I’ve detailed some things below that you should be aware of.

If you are thinking about accessing it, think very carefully, and please only use it as your very last resort)

Applying for a home loan or refinancing

• If you’ve accessed your super, lenders will consider that you are/were in ‘financial hardship’ and this could make it very difficult for you to get finance approval.
• You will need to wait 3-6 months, possibly longer, before you would be considered. Talk to your mortgage broker about the timeframe and options.

Loss of Insurance

• If your withdrawal/s have caused your balance to dip below the $6,000 mark and you held insurance in your superannuation, this could be automatically cancelled.
• You should contact your fund and review your position so that you are fully aware of what you have in place and how you can maintain the cover.

Significantly reduced Retirement savings

• $10,000 invested (benefiting from the impacts of compounding; e.g. reinvesting the earnings that your investment makes) would be worth tens of thousands more at your retirement, even up to 6 figures depending on your age. These lost earnings will have a significant impact on the future you.
• Super is your investment to support you once you retire – you will hopefully enjoy a 30 (or so) year retirement, so it’s important you look after this nest-egg.
• Many people have underestimated this impact, so you should try and put in place a plan to invest funds back into your super, keeping in mind if you can’t do it right away you will need to reinvest somewhat more than you withdrew.

Here are some additional links to great resources if suffering
financial hardship due to the pandemic:

• Financial Hardship policies with utility providers: https://www.finder.com.au/financial-hardship-programs-utilities
• Bank contacts to discuss your loans if you’re experiencing financial hardship: https://www.ausbanking.org.au/for-customers/hardship-contact-details/
• And you can visit Services Australia for more information on payments and services if you’re affected by COVID-19.
• The National Debt Helpline 1800 007 007 is a free resource where you can speak to a financial counsellor to get advice. You can also visit their website: https://ndh.org.au/debt-problems/covid19/

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