A superannuation technical expert has reminded practitioners of a lesser-known rule regarding a condition of release on the grounds of severe financial hardship having the ability to provide less restrictive access to their retirement savings benefits.
To this end, MLC TechConnect senior technical manager Mark Gleeson drew advisers’ attention to the 39-week rule relating to accessing benefits on the basis of severe financial hardship, but acknowledged it is only applicable for a particular cohort of individuals.
“You have to be age 60 plus 39 weeks [to be able to use this rule]. What the rule is saying here is if you’ve got to this point in time and you’ve been on income support payments for a cumulative period, so not continuous, of 39 weeks or more since turning age 60, you can access all of your super,” Gleeson told attendees of a technical webinar held last week.
“I should also mention [the individual must not have been] working 10 hours or more, meaning [they] are not gainfully employed. {If they satisfy these conditions, then] 100 per cent of [the person’s] super becomes unrestricted non-preserved.”
He acknowledged practitioners are more familiar with the 29-week rule with regard to the severe financial hardship condition of release.
Under that rule, a superannuant firstly must have been on income support, such as receiving a disability support pension, carer payment or JobSeeker payment, for the previous 26 weeks continuously.
Further, they need to demonstrate they have been unable to meet reasonable immediate family living expenses.
Gleeson pointed out there is no age restriction for people wanting to use this provision, but the benefits they can access is limited.
“[One] problem we’ve got with the 26-week rule is we’re actually limited to $10,000 [in any 12-month period]. That’s never been indexed to inflation and $10,000, 15 to 20 years ago, was worth a reasonable amount, [but now] it’s not worth much at all. So that condition of release in real terms, or real dollar value, is eroding over time,” he explained.
‘[The 36-week rule] is like a little ace up your sleeve.”
