The COVID-19 pandemic has impacted all Australians in ways far beyond those unfortunate 7000 (and counting) who have contracted the illness. The issues of mental health, education and care for the elderly and infirmed have all come to the fore over the past 10 weeks. Similarly, financial planners face a new range of issues that require consideration when guiding clients through this unprecedented environment.
This month’s Industry Insights looks at five new issues for financial planners and their clients to consider in this COVID-19 landscape.
3. Early release of Super
For clients who have fallen on particularly hard times due to the pandemic, the option exists for them to access up to $10,000 of their super in 2019/20, and a further $10,000 in 2020/21 (provided they lodge their claim by September 24, 2021).
Eligibility criteria largely revolves around being able to claim JobSeeker Payment or a limited number of other payments, or having been made redundant or had duties reduced by 20 per cent or more since January 1, 2020.
There has been much hand-wringing in parliament and the press about people eroding their retirement savings, and super funds being unable to meet the applications for release. When it comes to the former issue, the reality is fairly straightforward – if the client needs the money now, then they need the money now. To date, the latter issue hasn’t become manifest in a significant way.
As with any withdrawal from super, all issues need to be properly considered, such as loss of insurance and alternative cash-flow funding. ASIC is allowing advice on such withdrawals to be provided with minimal paperwork, provided certain conditions are met.
Applications for these withdrawals can be made through ‘MyGov’, and planners seeing clients before the end of financial year should have this potential source of money in mind. For clients in significant financial distress, the $20,000 available if applications are made either side of June 30 may be of far greater help than the $10,000 to which they will be limited if they don’t get their first application in on time.
The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.
The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.