How millions of Australians can access $20,000 from their superannuation as part of sweeping new coronavirus measures
- You can access $10,000 this financial year and again next year if in hardship
- But those who withdraw will also lose the money from their retirement funds
- Redeeming super now would also force the sale of shares, locking in a loss
- Sharemarkets have plunged more than 30 percent since February
- By contrast the government will simply give $20,000 cash to business
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Australians will be able to take $20,000 from their superannuation if they face financial hardship from coronavirus.
Prime Minister Scott Morrison announced a second stimulus package on Sunday, surprising the superannuation industry by allowing people to access their super early.
Struggling Australians can withdraw $10,000 tax free this financial year and another $10,000 the following year under the new provisions.
People can access $10,000 of their superannuation this financial year and another $10,000 next year if they are struggling due to coronavirus
Ordinarily, strict rules block people from accessing their superannuation until they hit retirement age of between 55 and 60.
Treasurer Josh Frydenberg said workers and sole traders could withdraw the money if the number of hours worked or their income fell by 20 per cent or more due to the coronavirus.
The early release also applies to welfare recipients who qualify for the coronavirus supplement.
‘This initiative builds on existing provisions that allow early access to super in the event of hardship or on compassionate grounds, and it is estimated to put up to $27 billion dollars of superannuation back into the pockets of hardworking Australians,’ the Treasurer said on Sunday.
However, people who withdraw now would not only lose this money from their retirement funds, they would redeem it at a time when share markets have plunged, forcing them to sell at a loss.
Breaking into the superannuation piggy bank may not be wise at this time as it will lock in share market losses if your super is invested in shares
Share markets have dropped more than 30 per cent since February and destroying trillions of dollars worth of value worldwide.
Mr Frydenberg announced the government would hand out $20,000 in cash to small businesses with some larger enterprises receiving up to $100,000.
Opposition Leader Anthony Albanese told Sky News it wasn’t the best time to withdraw money from superannuation.
‘Superannuation is one of the things that’s a ballast for our economy, it provides us stability, and what I wouldn’t want us to see is either people essentially missing out on a large part of their retirement incomes or for the super industry as well,’ Mr Albanese said.
‘Now’s not the time to be selling those assets,’ he said.
Struggling Australians have been warned not to cash in their super unless they have to
Mr Albanese warned of potential fire-sales if the big super funds started selling assets.
Australians had $3 trillion in superannuation as of December of which $1.9 trillion had been invested in various instruments, the Association of Superannuation Funds of Australia said on its website.
Of that $1.9 trillion, 51.4 per cent was invested in equities both Australian, international and unlisted.
The remainder was in fixed income, cash, property and infrastructure.