Coronavirus, early access to super and impact on insurance
July 1, 2020
The coronavirus (COVID-19) crisis may lead to many Australians having to stop work, some temporarily and some on a more permanent basis. During these times we understand that some of our members and their families may be under financial stress.
New government announcement - early access to super and COVID-19
The government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation balance in the 2019-20 financial year. You may access an additional $10,000 after 1 July 2020 and before 31 December 2020.
If you are eligible for this new ground of early release, you will need to apply directly to the ATO. This is available through the myGov website: www.my.gov.au.
Please note: If you are a permanent resident or a citizen, to apply for early release you must satisfy any one or more of the following requirements:
- you are unemployed; or
- you 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: you were made redundant; or your working hours were reduced by 20 per cent or more; or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
- If you are a temporary resident, other rules apply and we refer you to the ATO website for further information.
- Eligible Australian and New Zealand citizens and permanent residents were able to access up to $10,000 of their superannuation before 1 July 2020. They can now access a further $10,000 until 31 December 2020. This change does not impact eligible temporary visa holders who were only able to apply for a single release of $10,000 before 1 July 2020.
When can I apply?
You will be able to apply for early release of your superannuation from 20 April 2020 up until 31 December 2020.
Will I have to pay tax on the early release funds?
The government has advised that people accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Impact on insurance
The Covid-19 early release of super measure may have an impact on your Death, Total and Permanent Disablement (TPD) and Income Protection insurance cover in the following ways:
If your account is inactive, in that you have not made any contributions or rollovers from another superannuation fund to your account within the last 16 months, and you have not made an election to retain your insurance by completing our ‘Insurance Election Form’, your member paid insurance cover may be cancelled.
If you are concerned about protecting your member paid insurance cover, you can make an election to the Fund to retain your member paid insurance within your account and this election will remain in place indefinitely, unless you choose to cancel it in the future. You need to ensure that you have sufficient funds in your account to continue to pay for your member paid insurance cover.
Transfers to the ATO
If your account is less than $6,000, and you don’t satisfy the requirements in respect of account activity for that product within a period of 16 months, then your account balance will be transferred to the ATO.
Account activity means any of the following:
- the member changed the member’s investment options under the fund;
- the member made changes in relation to the member’s insurance coverage under the fund;
- the member made or amended a binding beneficiary nomination;
- the member, by written notice given to the superannuation provider, made an election that the account was not an inactive low balance account.
If you have any concerns about any of this information, and before making a withdrawal request, please call TelstraSuper on 1300 033 166 to discuss your situation.
What happens if my insurance cover is lost or cancelled?
If your insurance cover is lost or cancelled, you can apply for insurance cover again with the Fund’s insurer. However, you will be required to satisfy the Fund insurer’s underwriting requirements, which include the provision of personal information about your health and financial status.
Will my TPD cover be reduced because I have been stood down, lost my job or my working hours have been reduced?
The amount of TPD cover will be based on your salary that applied as at 11 March 2020 provided that premiums continue to be paid at this level.
If I am stood down, lose my job or have my working hours reduced because of Covid-19 does this affect my TPD claim?
For TPD claims with a date of disablement between 11 March 2020 and 1 January 2021, the employment status that will be considered will be based on your employment status as at 11 March 2020 provided that your TPD cover has remained in place continuously, premiums have been paid and the completed initial claim forms are lodged with TelstraSuper by 31 March 2021.
If I am stood down, lose my job or have reduced my working hours can I make a claim under my Income Protection cover?
No. Income Protection cover provides a replacement income that will support your return to work if you become unable to work due to sickness or an accident.
If I am stood down, lose my job or have my working hours reduced because of Covid -19 does this affect my Income Protection claim?
Income protection claims will be assessed based on standard eligibility terms and waiting periods except where restrictions apply to the cover. In the event of a successful Income Protection claim, your monthly benefit will be the lesser of your pre-disability income and your cover amount and the maximum cover limit, right before the date of disablement. However, if you cease to be a permanent employee, your income protection benefit will cease.
How can I access additional support or information if I am making a claim?
If you have any questions about an insurance claim please call the Insurance & Claims team on 1300 033 166. If you need to make a claim you can find out more about the process here.
All enquiries regarding TEMPORARY EARLY ACCESS TO SUPERANNUATION must be submitted to the ATO. Please be aware of current scam emails purporting to be from the ATO. The ATO would never ask for your bank account details other than in the secure myGov portal.
For more information accessing your super view the government fact sheet.
In addition to these temporary measures the regular rules for accessing your super are set out below also apply.
Situations where you may be able to access some of your super include:
- Reaching preservation age
- Severe financial hardship
- Compassionate grounds
- Permanently leaving Australia
- The First Home Super Saver scheme
- Situations where you suffer an illness or injury
If you are under financial stress there may be ways you can get early access to your super in some circumstances to meet immediate needs.
Financial hardship
Under superannuation laws, you may be eligible to withdraw up to $10,000 (a minimum amount of $1,000 can be withdrawn) of your preserved benefit on the grounds of financial hardship if you:
- have been receiving a Commonwealth Income Support payment for a continuous period of 26 weeks; and
- are unable to meet reasonable and immediate family living expenses.
If you're experiencing financial hardship, you can make an application to the Trustee of TelstraSuper to release some of your super under a special condition of release. However, you should be aware that different rules apply to the taxation of these benefits. Use the following link for more information https://www.ato.gov.au/Super/APRA-regulated-funds/Paying-benefits/Releasing-benefits/Conditions-of-release/#Compassionategrounds
Early release on compassionate grounds
In addition to making a financial hardship claim, you may also be eligible to claim your preserved benefits on compassionate grounds.
Benefits may be released on specified compassionate grounds if all the following conditions are met:
- a member does not have the financial capacity to meet an expense;
- release is allowable under the governing rules of your fund.
The amount of super that TelstraSuper can pay on compassionate grounds is limited to what is reasonably needed. This is paid to you as a lump sum.
- medical treatment and medical transport for you or a dependant;
- palliative care for you or a dependant;
- making a payment on a loan or council rates so you don't lose your home;
- modifying your home or vehicle, or buying disability aids for you or a dependant because of a severe disability;
- expenses associated with a death, funeral or burial for a dependant.
The Trustee has no authority to release preserved benefits under compassionate grounds. Applications must be made directly to the Australian Taxation Office (ATO). For further information visit www.ato.gov.au.
Suffer an illness or injury
Depending on your insurance cover if you are no longer able to work due to illness or injury you may be able to access your super through an insurance claim. Note insurance cover does not cover loss of job and unemployment conditions. See the relevant PDS for information on insurance cover.
Need help with accessing your super?
If you’d like more information on whether you may be able to access your super through severe financial hardship or compassionate grounds you can contact us on 1300 033 166 or complete our online contact form.