Accessing self-managed superannuation before retirement is illegal as everyone knows, but there are four ways in which it can be accessed legally.
1. For severe financial hardship (SFH).
2. On compassionate grounds - a one-off payment.
3. During temporary incapacity.
4. For permanent incapacity.
For the first one there are two rules to do with the age of the person applying. That is, if they are under 55 years and 39 weeks or if they are over this age. Of course, documentation must be provided to prove the SFH and specific criteria must be met for each.
But what constitutes compassionate grounds? A one-off payment may be paid to a member if they need to pay a large medical bill for themselves or a family member, are in danger of loan foreclosure on their home, to modify their residence for special needs, or to pay for palliative care or funeral expenses.
A member may be paid a pension from their self- managed superannuation during a time of temporary physical or mental incapacity. Once health is regained, the pension stops. If the incapacity is of a permanent nature then the pension can be paid out permanently. The trustee is the one who is to decide whether these criteria are met.
Mel writes about self-managed Superannuation, self-managed Super and other finance topics.
