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Govt extends Covid-19 early superannuation access

A man holding Australian banknotes smiling while holding a piggy bank in the other hand.
Early access to superannuation has been extended. (Image: Getty)

The Federal Government has extended the deadline for Australians in financial strife to get their hands on $10,000 of their superannuation.

The economic and fiscal update delivered on Thursday revealed December 31 is now the cutoff for Covid-19 hardship applications for early superannuation withdrawals.

The deadline was previously September 24.

The original scheme to allow cash to be drawn out of retirement funds permitted $10,000 before 1 July and a further $10,000 after that date. The withdrawal must be made in one transaction on each side of 1 July.

Australians have always been able to access super funds in cases of financial hardship. But the Covid-19 pandemic this year forced the government to relax the eligibility rules.

The temporarily milder rules saw a larger tolerance for investment assets from applicants, to avoid virus-impacted people having to sell out.

At the start of May, the upper and lower social security deeming rates were also lowered to 2.25 per cent and 0.25 per cent respectively.

The temporary early super access scheme is expected to cost $2.2 billion over five years from the 2019-20 financial year.

More than half a million people applied for a hardship withdrawal before 1 July, then 346,000 applied for a second withdrawal.

As of last week, $19.1 billion had been pulled out of super accounts via 2.54 million early access applications.

Superannuation experts have warned early withdrawals could cost the applicant a lot of money down the track.

Industry Super Australia analysis showed a 20-year-old Australian who pulls out $20,000 now would end up losing as much as $120,000 by the time she retires.

“Members should tread carefully and only think about cracking open their super after they’ve taken up the extra cash support on offer from the government," said ISA chief executive Bernie Dean.

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