Exploring compassionate early release of super

Superannuation is designed to provide for your retirement, but there are limited circumstances where you can access your super early on compassionate grounds. These provisions are in place to help meet urgent expenses for you or your dependants when other options have been exhausted.

The ATO oversees applications for the compassionate release of superannuation; in 2023–2024 it approved the release of $1.04 billion of superannuation.  

It’s important to understand the specific situations that may qualify and the process involved.
Compassionate grounds cover a range of circumstances, including:

• preventing foreclosure or forced sale of your home;
• medical treatment for you or your dependants;
• medical transport for you or your dependants;
• modifying your home or vehicle to accommodate special needs arising from severe disability;
• palliative care for terminal illness; and
• death, funeral or burial expenses for your dependants.

Generally, applications need to be for unpaid expenses. This means you can’t claim for costs you’ve already covered.

Let’s focus on preventing foreclosure or forced sale of your home, as it’s a common concern. You may be eligible if you’ve received a threat to repossess or sell your home from your mortgage lender due to arrears, your council due to outstanding rates, or an enforcement officer acting on a court order.

To qualify under this ground, you must meet four key conditions:

1. The property must be your principal place of residence.
2. You must be legally responsible for the mortgage repayments or council rates.
3. You must have received written advice about the impending foreclosure or forced sale.
4. You must have no other capacity to pay the amount needed to prevent the foreclosure or sale.

The amount released from your super must be a single lump sum, not exceeding what’s reasonably required. For mortgage foreclosure prevention, the release is limited to three months of repayments plus 12 months of interest in any 12-month period.

Before applying to the ATO, it’s crucial to contact your super fund. The fund can confirm if it’ll release your super early on compassionate grounds, check if you have sufficient funds (including for tax withholding), advise on any fees and explain potential impacts on your insurance.

Remember, accessing your super early should be a last resort. It’s your future financial security at stake. However, when faced with genuine hardship, it’s reassuring to know that this option exists to help through difficult times.

Source: ATO - Compassionate release of super