The Government is allowing eligible Australians to apply to withdraw up to:
- $10,000 of their superannuation in financial year 2019-20 (before 1 July 2020), and
- Up to a further $10,000 in financial year 2020-21 (from 1 July until 31 December 2020).
Update: 23 July 2020 – It has been announced that eligible individuals will now have until 31 December 2020 to withdraw up to $10,000 from their super under this scheme. This is an extension of the original cut-off date of 24 September 2020.
Please note that eligible individuals are still limited to one claim for the 2020-21 financial year. If your client hashalready made a claim under the Coronavirus early release scheme in the 2020-21 financial year, this extension does not allow for a second claim.
We also have a range of support material available to help you better understand these provisions (as well as the other elements of the Government’s economic support package) and to share with your clients:
One of the support measures announced includes the early release of superannuation designed to help Australians who are under financial stress as a result of Coronavirus.
The Government is allowing eligible Australians to apply to withdraw up to:
To apply for early release your client must satisfy any one or more of the following requirements::
For eligibility requirements for temporary residents please refer to the ATO.
Members are now able to apply for early access to their super through myGov.
If members are eligible, they can apply directly to the Australian Taxation Office (ATO) through the myGov website: www.my.gov.au. For those that are unable to access online services, they will be able to call the ATO, confirm their identity and complete the application over the phone.
If your client has a SMSF they will also be required to apply for early access via the MyGov website. If the ATO approves their application they will be issued with a determination, which then authorises their fund to mnake the payment.
For more information, please visit the SMSF frequently asked questions page on the ATO website.
It will take up to 1 to 2 business days for Colonial First State to receive notifications from the ATO once they have approved it.
FirstChoice: Once all the required information has been received we will endeavor to have payments processed within 5 business days. Following processing of payments it can take 3-5 business days for your client to receive the payment in their account, depending on their financial institution.
FirstWrap: Once all the required information has been received we will endeavor to have payments processed within 1-2 days. Following processing of payments it can take 3-5 business days for your client to receive the payment in their account, depending on their financial institution
Where there is insufficient cash to make the payment (and retain the required minimum level of cash within the account), further steps must be completed to top up the available cash in the cash holding account in order to process the withdrawal request. This adds additional time to the processing time. Please ensure your client has sufficient cash in their cash holding account and that any required trades will also meet the minimum cash balance requirements to cover scheduled payments, fees and costs and transactions following the payment of this claim.
Your clients do not need to contact Colonial First State as part of this process unless they wish to make a change to or cancel their claim.
Your clients do not need to contact us to provide us with their bank details or confirm if we have their current bank details in this instance because CFS will use bank details provided to us by the ATO.
People accessing their superannuation early in this circumstance will not pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
FirstWrap: If a member is withdrawing from their FirstWrap account any sell downs to fund a redemption may have tax implications for the member. Members should speak with their adviser prior to proceeding.
Your clients are generally free to recontribute any unused amounts to their super in the future (within contribution caps) if they are under age 67, or otherwise eligible to contribute.
To help your clients with this process we have information on the following topics available on our website:
If your clients have any questions about whether or not they are eligible to make a contribution or how they are impacted by the contribution caps we recommend they speak with their financial adviser, if they have one, or the ATO.
ATO warning – early release and tax avoidance schemes
The ATO have warned that to be eligible to withdraw an amount under this scheme, the money released must be to assist members deal with the adverse economic effects of Coronavirus. If members withdraw an amount for the main purpose of recontributing the released amount as a personal super contribution to claim a tax deduction, they may no longer be eligible and be subject to tax consequences. For more information, please see the ATO website.
We recommend FirstChoice members refer to our website for information on how to make a contribution to their super.
We recommend FirstWrap members, contact their adviser or call FirstWrap Service and Support on 1300 769 619 if they would like to make a contribution to their super.
No. TTR pensions and TAPs are non-commutable and lump sums cannot be withdrawn from these pensions under Coronavirus Compassionate Grounds.
If they’ve made a claim under normal Compassionate Grounds or Severe Financial Hardship – they can still make a separate claim for Compassionate grounds due to Coronavirus.
Compassionate grounds under Coronavirus is separate from the regular early release of super under Compassionate Grounds or Severe Financial Hardship.
The Government has confirmed that members will only be permitted to make one Coronvairus compassionate grounds claim (even if the member holds multiple funds) per financial year.
If your client made a claim during the 2019-20 financial year they may also be able to make another claim from 1 July 2020 until 24 September 2020. After this date they will not be able to submit any further claims.
Note – If your client is an eligible temporary resident they are only permitted to make one application for up to $10,000 from your super for the 2019/20 financial year only (prior to 1 July 2020). See “My client is the holder of a temporary visa. Are they eligible to apply for the early release of my super?” for more information.
If an early release payment removes all the funds from your client’s account, the account will be closed and any insurance that was on the account will be cancelled. Insurance could also be cancelled if your client’s account balance drops to a level where premiums can no longer be funded.
Once an account is closed it can no longer accept any additional contributions (except for some FirstChoice Employer Super accounts – please see below explanation)
FirstChoice Employer Super accounts can accept further employer contributions for 6 months following a full redemption.
If a contribution was/is received, members who held insurance prior to their full withdrawal under this scheme will be notified that they have the choice to continue their insurance. If members wish to continue their insurance they will be required to complete and return the form enclosed with the letter confirmation.
FirstChoice: we will pay the withdrawal by making a proportional drawdown across the existing investment weightings in your client’s account.
FirstWrap: If there is insufficient cash available in your client’s cash account we will contact you and you’ll have until the end of the next business day to provide us with your instructions. If we don’t hear back from you within this time-frame, we will proceed with the payment by performing a sell down of managed funds as per our minimum liquidity process. As described on the PDS, the managed funds we consider most liquid will be sold first.
Please note that withdrawal requests where there are insufficient funds in your client’s cash account may not meet the target timeframe where payments are made within five business days of receipt of a determination from the ATO due to the time it takes to sell down the investments, and for fund managers to process the redemption requests.
If your client withdraws part of their balance as an early release payment
If your client has insurance in their super account, sufficient funds will need to be retained in their account to pay insurance premiums. If there is not enough money remaining in their account, their insurance may be cancelled.
If your client withdraws their full balance as an early release payment
If your client withdraws their total super account balance, any insurance cover they have will be cancelled.
Yes. Holders of temporary visas are able to apply for the early release of their super under these measures.
However, please note:
- Additional eligibility criteria apply depending on which type of visa your client holds, and
- They are only permitted to make one application for up to $10,000 from their super for the 2019/20 financial year (prior to 1 July 2020).
As this process is completed by the ATO any identification requirements will need to be provided to the ATO. Your client do not need to provide CFS with any proof of identification documents as part of the application process.
The balance shown on MyGov will be from a previous date when CFS last reported to the ATO. We last reported FirstChoice accounts to the ATO on 1 July 2020 and FirstWrap accounts are reported monthly. This means, the balance shown on MyGov may differ to the actual balance of the account.
There are several reasons that your account balance may have dropped between then and now. these including:
The balances displayed on myGov are those that have been most recently reported by super funds and may not be the current balance of their account. Members can check the current balance of their account through FirstNet/FirstWrap.
Members can apply for an amount that’s higher than the myGov figure (as long as their total application doesn’t exceed $10,000) by typing it into the ‘release amount’ field. If the amount they apply for is greater than their current account balance at the time we make the payment to them, we will pay them the full balance of their account and their account will be closed.
If they withdraw their total super account balance, any insurance cover they have will be cancelled.
Individuals can only make one application per financial year, to a maximum of $10,000 across all super funds. If they apply for $10,000 against an account that has only $8,500 – they will only receive $8,500.
However, if they have multiple accounts with less than $10,000 in any one account, they are able to nominate more than one account from which amounts are to be released when they apply to the ATO
For example, if they had two super accounts with $5,000 in each, they will be able to claim $5,000 from each fund at the time they make the application.
The ATO has recently confirmed that Trustees are able to defer the transfer of inactive low-balance accounts due in April until October 2020.
FirstChoice: The transfer of these accounts will be deferred until the next run, due in October 2020. We are working through the impacts of this and will provide more information shortly. This has been delayed to prevent members seeing this amount through MyGov and intending to access it through an early release request.
FirstWrap: FirstWrap has already completed the transfer of accounts to the ATO for inactive-low balance accounts dated 31 December 2019.
If your client currently have insurance through their FirstChoice/FirstWrap super account they will be covered for Coronavirus. This includes death, total and permanent disablement or income protection insurance (which can provide a regular monthly payment if they're unable to work due to illness or injury). If they need to make a claim related to Coronavirus, as with any other claim, they will simply need to meet the eligibility requirements for your type of cover.
Coronavirus has no impact on their existing insurance cover with us. While the product disclosure statement provides the insurer with an option to apply an exclusion for pandemics for new members our insurer has informed us they will not be applying that option.
Please note that if your client's employment hours are reduced this may impact any Salary Continuance Insurance claim that they wish to make.
Colonial First State has strong controls in place to monitor suspicious and fraudulent activities. In addition the ATO has also adopted cyber security measures prior to the completion of any Superannuation Early Release application.
The industry is aware of targeted attempts of fraud and are working closely with the ATO and other financial institutions to monitor and prevent any activity from occurring.
We encourage members to monitor their accounts for any unauthorised activity and if they have concerns, or they receive suspicious communications , they should immediately raise this with Colonial First State or the ATO.
If there is insufficient cash available in the super account we will contact you or your client to request direction on which investment to sell down to increase the cash account.
We will allow you and your client until the end of the next business day to provide us with instructions.
If we don’t hear back within this time-frame, we will proceed to top up the available cash in the cash holding account by performing a sell down of managed funds as per our minimum liquidity process. As described in the PDS, the managed funds we consider most liquid will be sold first. Once the cash holding account has sufficient available cash for the withdrawal, the payment will be made.
Where we receive a direction from the ATO to make a payment and the account contains suspended assets we will pay the maximum available amount. We suggest that members confirm the available funds in their account before nominating accounts and amounts with the ATO.
No, we are unable to process a maximum partial payment.
Examples of maximum partial payment scenarios for illustrative purposes include, but are not limited to:
Scenario 1: The member requested a $10,000 payment but there is only $5,000 in cash within the account. Trades are placed on the account to sell down the other $5,000 in assets to make up the $10,000. The member requests the maximum amount payable now then another payment when the assets are sold.
Scenario 2: The member requests a $10,000 payment but the account balance is only $9,000. The member doesn’t want to close their account so they ask for a the maximum payment possible. The amount paid to the member would be the maximum amount payable minus any liabilities or minimum cash balance that is applicable to keep the account open. Therefore the payment would be $8900.
We typically receive a notification from the ATO providing a list of eligible members and the amount we are authorised to withdraw once every business day.
Your client will need to submit a change of details form or signed cover letter. This form can submitted via e-post or posted to us at the following addresses:
GPO Box 3956
Sydney NSW 2001
Locked Bag 3460
Melbourne VIC 3001
Yes, your client can only claim a tax deduction under Notice of Intent if the funds are still held within their super account.
The amount your client can claim will be impacted if they withdraw funds under Coronavirus early release prior to submitting the Notice of Intent to Colonial First State.
MyGov links to your client's super account using their Tax File Number (TFN). When we report to the ATO we report their TFN along with other relevant information.
If their account does not appear in MyGov it is likely that either we, or the ATO do not hold a TFN for your client or the TFN held is incorrect.
Your client can update their TFN details with Colonial First State by contacting member services. We will then notify the ATO of their updated account details within 1-2 business days.
Your client should also contact the ATO to confirm their TFN details.
No, this is simply an extension of the date from 24 September 2020 to 31 December 2020, giving members more time to make a claim if they believe their circumstances require it.
If your client has already withdrawn under this scheme in the 2020-21 financial year, they are not able to make a second claim.
One of the support measures announced includes temporarily reducing minimum pension payment requirements for retirees.
The Government is helping retirees to manage the impact of volatility in financial markets on their retirement savings by temporarily reducing superannuation minimum drawdown requirements.
|Age||Previous minimum drawdown rates (%)||Default rates (%)|
Minimum percentages are calculated on account balance at commencement of pension and at start of each subsequent financial year.
Drawdown changes apply to account based pensions, allocated pensions and market linked pensions, otherwise known as term allocated pensions (and for the equivalent annuity products).
Yes, the changes also apply to Term Allocation Pensions (TAPs) and Transition to Retirement Income Streams (TRIS/TTRs).
Yes, your client’s pension will automatically be reduced to the new minimum in the 2020-21 financial year in accordance with the legislation.
We will write to your clients in July and provide them with their new yearly pension amount. This letter will also provide them with an opportunity to make additional changes to their payment amount.
Minimum percentages are calculated on the account balance at commencement of the pension and at start of each subsequent financial year.
The legislated reduction to minimum pension amounts relates to the 2019-20 financial year and the 2020-21 financial year.
The reduction for the 2020-21 financial year began on 1 July 2020.
Your clients can request to reduce their pension payment at any time.
FirstChoice: They can request to reduce the amount of their pension payment at any time via the following methods:
FirstWrap: Your clients can request to reduce the amount of their pension payment at any time by submitting a ‘Change of account details’ form for pension accounts to email@example.com, or over the phone. You can also do this for them via e-post.
Yes, we have completed an out-of-cycle report to Centrelink as many client account valuations have fallen.
FirstChoice values were reported at 2 April and FirstWrap values at 8 April.
If your client opens a new pension account today and opts to receive the minimum, they will receive the new temporary reduced minimum amount.
As the temporary reduced minimums are law for this financial year we are required to lower the pension payment of members’ who have opted to receive the minimum pension payment to the new temporary minimum relevant to their age.
If your client wish to receive a higher amount please note that any changes they make to their pension payment will be effective from when their next pension payment is due. They, or you on their behalf, can update their pension payment by the following methods:
Superannuation funds are required to calculate the minimum annual payment required at 1 July each year, based on the account balance of the member at that date. For 2020/21, the 50% reduction will apply to the calculated minimum annual payment.
For example, a member has an account based pension with an account balance at 1 July 2020 of $400,000. The superannuation fund would calculate the minimum annual payment for 2020/21 using the reduced minimums. If the member is age 70 at 1 July 2020, the reduced minimum of 2.5% (instead of the standard minimum of 5%) applies, providing a minimum of $400,000 x 2.5% = $10,000.
Yes, we can process an additional pension payment for your client.
We will electronically report your client's revised Centrelink schedule to Centrelink on their behalf in February and August.
We are also able to provide them with a copy via email or post at any point throughout the year.
We will electronically report your client's revised Centrelink schedule to Centrelink on their behalf in February and August.
If your client makes a change on their account at any other time during the financial year we can still provide them with a Centrelink schedule which they are able to provide to Centrelink.
The Pension Payment Information Statement is generated using their account information at 1 July 2020. The amount shown on FirstNet is the based off their account information at that moment in time.
If their amount on FirstNet or a confirmation letter dated after 1 July 2020 differs from their Pension Payment Information Statement this is due to their pension payments being updated for the 2020-21 financial year, and should be treated as the most up to date information.
If you or your clients are a CommBank customer, you can access a range of support here: https://www.commbank.com.au/latest/coronavirus.html?ei=hp-ban-cvp-default-coronavirus
Many of the banks are also providing assistance packages so it’s worth checking with your bank if you need support.
Your clients with death, total and permanent disablement or income protection within their Colonial First State super account will be covered for Coronavirus.
While the Product Disclosure Statement provides the insurer with an option to apply an exclusion for pandemics for new members, our insurer has informed us they will not be applying that option.
If your client is intending to take advantage of the Government initiative regarding early access to your super and they wish to keep their current insurance cover, please ensure they retain enough funds in their account to cover insurance premiums so that it will not be at risk of being cancelled.
Markets continue to feel the effects of Coronavirus. We continue to closely monitor the situation and our teams are regularly communicating with investment managers. Together we’re actively managing the risks and opportunities in investment markets as developments unfold.
We have a wide range of information on our website to help you and your clients, including the latest market updates and tips for managing volatile periods.
CommBank is updating their coronavirus support page regularly with the latest advice and guidance. They’ve also developed a Financial Support Guide which outlines some of the support measures available for individuals impacted, including people whose jobs have been affected and retirees
If you and clients are not Commbank customers, many other banks are providing similar support packages and information so please get in touch with your bank.
Here are just some of the steps we’re taking to prioritise the health, safety and wellbeing of our employees and limit the impact to our members:
ADVISER USE ONLY
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. It also issues interests in the Rollover & Superannuation Fund (ROSCO) and Personal Pension Plan (PPP) offered from the Colonial First State Rollover & Superannuation Fund ABN 88 854 638 840. Colonial First State also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The Bank and its subsidiaries do not guarantee the performance of FirstChoice products or the repayment of capital for your investment. Colonial First State Custom Solutions is the registered business name of Avanteos Investments Limited ABN 20 096 259 979, AFS Licence 245531 (AIL). AIL is the trustee of the Avanteos Superannuation Trust ABN 38 876 896 681 which includes FirstWrap Plus Super and Pension, and is the operator of The Avanteos Wrap Account Service which includes FirstWrap Plus Investments. AIL is owned ultimately by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (the Bank). The Bank and its subsidiaries do not guarantee the performance of AIL products or the repayment of capital by AIL. This is based on the understanding of current regulatory requirements and laws as at March 2020. This document may include general advice but does not take into account your individual objectives, financial situation, needs or taxation circumstances. You should read the relevant PDS or IDPS Guide before making an investment decision and consider talking to a financial adviser. FirstChoice PDSs can be obtained from from colonialfirststate.com.au or by calling 13 13 36 and FirstWrap PDSs and IDPSs from your adviser or firstwrap.com.au.