COVID-19 FAQs

You may have some concerns about the impact the COVID-19 (Coronavirus) pandemic is having on your super, so we’ve put together answers to some of the key questions you’ve been asking.

COVID-19 and my super

Has the value of my super changed because of COVID-19?

The value of your super is always changing. Since February most investments around the world have fallen in value for reasons that are largely linked to the COVID-19 pandemic. This has affected the value of shares (equities), properties and even term deposits—some things super funds invest in. 

Because COVID-19 has caused many businesses to temporarily cease operations, with many people losing their jobs, most companies have an uncertain time ahead of them. So, the value of shares in those companies has fallen. 

So, for most Australians their super is worth less now than it was at the beginning of February. Each person and each super fund are different, but your super might be worth between 5-15% less than it was prior to the outbreak of COVID-19. Depending on your investments, it might be more, or it might be less. 

But as the economy recovers, the value of the investments your super fund has will recover and you can expect for the value of your super to return to where it was and continue to grow beyond that. Investment markets can fall in value quickly as we have just seen, however, they can also rise quickly.

Why have markets fallen and when will they rebound?

One factor that has led to this fall in markets has been COVID-19. No nation around the world is unaffected, and it has affected virtually all forms of investment in some capacity. The virus occurred suddenly, and it is hard to predict how long it will take to disappear, and how many lives it will touch. Investors don’t like uncertainty and we are seeing a lot of volatility in investment markets. Since the outbreak of COVID-19, some share markets around the world have lost as much as 30% of their value. On particular days markets have dropped steeply and then the next day risen steeply, only to fall again the next day.

Government’s around the world are taking drastic measures to deal with the virus and to support their economies. Very unusual policies and practices are in place, many of which we have not seen occur before. This means it is hard to predict how these decisions will work and at what speed.

We can be confident that markets will rebound. Through history, share markets, for example, have always recovered their losses.

The chart below shows the Australian share market over the last 35 years as an example.
CHART-MARKETS1.png
Source: S&P ASX, Frontier Advisors

 

What is LUCRF Super doing at the moment?

We work with a team of investment experts, with many years of experience.  Each day they are looking at the impact of COVID-19 on your investments.

Working with fund managers and asset consultants (like Frontier Advisors) we have thousands of investment specialists around the globe researching and analysing markets to help make decisions to improve outcomes for our members.

Our investment experts are meeting regularly to monitor the situation as it develops and will respond as required.

While we still don’t know the full impact of the COVID-19, we’ve planned for risks like this in our investment strategy.

What should I do to protect my super?

Everyone’s situation is unique. For most people who are not likely to access their super for many years, doing nothing is an investment strategy in itself. That might sound like you are ignoring the problem because at a time like this many of us feel like we need to take action. But when investment markets fall, people often lose more money by making decisions at the wrong time.

Investment markets always have periods where values go up and down. The Global Financial Crisis (GFC), ten years ago, is the most recent example of a large “downturn” or “correction”. Throughout history investment markets have always recovered and risen to levels higher than before these periods of loss. Individual companies or investments do not always recover, but the overall share and property markets do.

So, switching your super money between investments now to avoid losing more might mean you miss out on the gains when those investments pick up and rise in value. 

Changing their investments away from more volatile investments, like shares, after the value had already gone down and missing the benefit of that value going back up would have lost thousands of dollars which can never be recovered.

The below chart shows examples of what could have happened to a person’s super depending on the different decisions they might have made during the GFC.

chart-markets2.pngSource: Frontier Advisors, SuperRatings. The analysis is based on the returns during and after the GFC and assumes an average member with a starting balance of $50,000 and SG contributions invested in the median balanced/cash fund.
 

I'm in the Balanced investment option and my balance is now lower than last year. Should I switch to a safer option?

It is worth keeping in mind that super is a long-term investment and there is value in maintaining a steady investment focus even if market downturns are severe in the short-term.

The Balanced (default) investment option is where most of our members have their money invested in. It is a diversified investment option which is generally less volatile than any single asset class (like shares) and has achieved an average return per annum of 9.6% since it started, in 1978. (19/12/1978). This option seeks to balance both risks and return to maximise the long-term returns of your super and reduce the ups and downs of investments.

The Balanced investment option strategy works on the principle that certain investments (like shares and property securities) generally experience greater unpredictability in the short-term when compared with assets like cash and bonds. However, shares and property securities are more likely to achieve better returns over the long-term than bonds and cash.

Members that kept their super invested in our Balanced investment option for the last 15 years (despite the Global Financial Crisis in 2008 and 2009) found themselves with a substantially higher account balance than those that switched to the more conservative option. When members switched their super investment from Balanced to Cash, they realised (locked-in) the capital losses on their super and then subsequently missed out on the better market conditions (up-swings) that occurred on financial markets since.

I’m retired and concerned that my Account-Based Pension will run out of money sooner due to the current negative returns caused by COVID-19 – what should I do?

The Government has legislated for a temporary reduction on the minimum drawdown amounts (or rates) for eligible account-based pensions, which is intended to help manage the impact of eroding pension balances due to the current share market volatility caused by COVID-19.

Annual minimum payment drawdown amounts (or rates) for account-based pensions will be halved for FY2019 -20 and FY2020-21. 

For example, a person who is receiving the minimum LUCRF Retirement Pension income of 5% of their LUCRF Pension balance this financial year may now instead receive 2.5% of their LUCRF Pension balance to make their pension last longer. The person may then choose another temporary minimum income drawdown of 2.5% of their pension balance in the new financial year.

More information here.

COVID-19 and my insurance

Can I claim on income protection policy if I’ve been made redundant?

A person who is sick or injured beyond their waiting period (e.g. longer than 30 days) may be eligible for income protection insurance – unfortunately redundancy is not covered.
More information here.

If I use the early release to cash-in all my super, what happens to my insurance cover?

By using the early release to cash-in all your super, your LUCRF Super account will close and you will then lose any insurance cover that is part of your LUCRF Super account.

You may wish to consider leaving enough funds in your LUCRF Super account to cover the cost of insurance premiums to keep your existing LUCRF insurance cover.

COVID- 19 and temporary early access to super

I’ve lost my job due to COVID-19, should I apply?

If you’re experiencing financial stress because of the COVID-19 pandemic, you may have an immediate need to access your super early. However, it’s important to consider that taking $10,000 out of your super now could reduce your super balance by a much larger amount when you come to retire due to the compounding effect on your lower super balance post withdrawal.

Because your super is money that is invested for you to use when you retire, it's costly to cash in your super now, earlier than expected. You will miss out on the future earnings that money could have made in the years ahead. The way investments work means that as your super balance grows higher, your super earnings also grow faster.

Rather than taking a lump sum out of super in a falling market, members may instead wish to consider the Government’s range of support options for individuals during the COVID-19 pandemic. 

Before you apply to withdraw super early, it might be worth reviewing if you’re eligible for any other forms of support. 

More information here.

The below chart shows what would have happened to a sample member if they had taken money out of their super during the GFC.
chart3.pngSource: Frontier Advisors, SuperRatings. The analysis is based on the returns during and after the GFC and assumes an average member with a starting balance of $50,000, invested in the median balanced fund, with no contributions for six months and SG thereafter.
 

Who's eligible for these payments?

To apply for early access to your super, you must satisfy one or more of the following requirements:

Australian and New Zealand citizens and permanent residents

  • you're unemployed; or
  • you're eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020:
    • you were made redundant; or

    • your working hours were reduced by 20 per cent or more; or

    • if you're a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Temporary visa holders

Student visa holders (Subclasses 500, 570-576):

  • you've held your student visa for 12 months or more; and
  • you're unable to meet your immediate living expenses.

Temporary skilled work visa holders (Subclasses 457 and 482)

  • on or after 1 January 2020, you had your working hours reduced to zero by your employer; and
  • you're still employed by that employer.

All other temporary visa holders (including Working Holiday Maker visa holders and other working visas)

  • you're unable to meet your immediate living expenses.

More information here.

If I withdraw all my super, what happens to my insurance cover?

Early withdrawals from your super account could result in any insurance cover you have being impacted. Please refer to COVID-19 and your insurance and the LUCRF Super Insurance Guide for more about when cover ceases and the steps you need to take if you wish to maintain your insurance cover.

How can I apply?

If you’re eligible, you can apply through ATO online services in the myGov online portal between 1 July and 31 December 2020 (FY2020-21).

Find out more here.

Important note: You should carefully consider eligibility criteria as penalties of up to $12,000 apply for making false and misleading statements.

What is my current super balance?

The super balance available through the ATO may have changed recently, due to any withdrawals from your account, contributions made, rollovers in and out of your account, recent investment market volatility, administration fees and any insurance premiums deducted from your account. You can check your current LUCRF Super account balance in Members Online or via the LUCRF Super app and you should use this amount as a guide to how much you can request under temporary early access rules via the myGov online portal. If the ATO approves your application but the amount you have requested is higher than your actual account balance, we can only pay you the amount in your account.

If you're applying to the ATO for early access to your super for the second time, it's vital that you check your current LUCRF Super account balance in Members Online as the balance you see in myGov won’t reflect the early access payment we made to you earlier this year.
 
 
 

I’ve applied for early access to my super. What is the process and when will I receive it?

Once you apply to the ATO via the myGov portal:

  • The ATO will process your application and within 2-3 business days they will tell you if it has been approved or rejected (called a determination). This determination will be a letter sent to your MyGov inbox. The letter will tell you how much super will be released to you.
  • Then, the ATO will notify LUCRF Super that you’ve been approved. You don’t need to contact us directly to let us know your application has been approved by the ATO.

If we have your mobile phone number, we’ll send you an SMS of this advice to let you know we’re processing your payment.

We will generally process your payment within 5 business days of the ATO notifying us, and the money will be in your bank account within a further 5 business days, depending on your banking institution.

However, some requests might extend beyond five business days if we need to do extra verification or other checks on your account.

More information here.

Am I eligible for any other forms of financial assistance?

If you’re feeling overwhelmed by money issues, it can be hard to know where to turn. We have summarised some of the key measures the Government, banks, super funds and others are offering to immediately help Australians financially throughout this time.

More information - Six options for financial support during COVID-19.

Financial advice

How can I get Financial Advice?

Our Financial Advisers are currently providing over the phone financial advice with face-to- face advice temporarily suspended due to COVID-19.
Our advisers can help you with:

  • Selecting an appropriate investment option

  • Maximising superannuation contributions

  • Understanding your insurance requirements; and

  • Starting a pension income stream

  • Or discuss impact of Early Release of super on your future balance

If you would like to speak to one of our Financial Advisers, call us on 1300 130 780 or use our online booking form to request a call here.

Does LUCRF Super charge for financial advice?

LUCRF Super’s financial advice service is at no cost to members if the advice pertains to your LUCRF Super accounts (known as Intra-Fund advice).

All our advisers are salaried employees of LUCRF Super and do not receive bonuses or commissions.

Business operations

How is LUCRF Super operating in light of the COVID-19 pandemic?

In line with Government recommendations we are taking preventative measures to safeguard the health and safety of all our members and staff. Whilst our offices are closed to the public until further notice, our friendly Contact Centre, qualified Financial Advisers and experienced Business Development Managers are available to members and employers over the phone, email or via online conferencing.

Our Contact Centre team is operating according to normal hours however we ask for your patience as we are experiencing higher than normal call volumes. If you're unable to reach us by phone, please send us a message here and we'll get back to you as soon as possible.

More information here.

Do you have questions about COVID-19 and your super?

Speak to one of our experienced advisers, it's at no extra cost to you.

Request a callback

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