Financial hardship claims: accessing your super early while your TPD claim is assessed

Disclaimer – This article is general information and education only. It is not financial or legal advice. Every superannuation release application depends on your circumstances, fund rules and government regulations. If you are applying for early access to super while a TPD claim is pending, seek guidance from a financial adviser or superannuation/insurance-claims lawyer.

A Total and Permanent Disability (TPD) claim can provide a life-changing lump sum if you are permanently unable to work. But there’s a catch — these claims often take 6–18 months to be assessed, and sometimes longer if there are disputes.

Meanwhile, your bills don’t stop. Mortgage payments, medical expenses, and daily living costs pile up.

The good news is that in some circumstances, you may be able to access part of your superannuation early through a financial hardship or compassionate grounds claim, even while your TPD claim is still being assessed.

This guide explains how early release works, who is eligible, and what to consider before applying.

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Why early release matters during a TPD claim

• Lengthy delays – TPD insurers and super trustees often take months (or years) to make a decision.
• No income support – If workers’ comp or Centrelink isn’t enough, households struggle to cover essentials.
• Medical costs – Out-of-pocket expenses for treatment, rehab, or home modifications can add up quickly.
• Cash flow gap – Financial hardship release offers a temporary bridge until your TPD lump sum is approved.

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Early access options under superannuation law

Two main ways to apply for early access while waiting for a TPD outcome:

1. Severe financial hardship – through your super fund.
2. Compassionate grounds – through the Australian Taxation Office (ATO).

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Severe financial hardship claims

You may qualify for early release on financial hardship grounds if:

• You have been on eligible Centrelink payments (JobSeeker, DSP, Carer Payment, etc.) for 26 continuous weeks or more, and
• You are unable to meet reasonable and immediate family living expenses.

Key points:

• Withdrawals limited to $1,000–$10,000 in a 12-month period.
• Apply directly to your super fund, not the ATO.
• You will need Centrelink confirmation of eligibility.

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Compassionate grounds claims

You may qualify for early release on compassionate grounds if the money is needed for:

• Medical treatment or transport.
• Modifying your home or car due to disability.
• Palliative care.
• Preventing foreclosure or forced sale of your home.

Key points:

• Apply through the ATO.
• No fixed dollar limit – but only what is “reasonably required.”
• You must provide supporting evidence (quotes, invoices, medical reports).

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How does this interact with your TPD claim?

• Separate process – A hardship/compassionate claim does not affect your TPD claim.
• No impact on eligibility – Insurers can’t use this to deny your TPD claim.
• Fund rules apply – Not all funds allow hardship withdrawals during an active TPD claim.
• Partial access only – You cannot withdraw your full balance until TPD is approved.

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Worked examples

• Example 1 – Mortgage arrears
  Liam, 47, is waiting on his TPD claim after a spinal injury. He applies to the ATO for $15,000 compassionate release to stop foreclosure on his home loan. Approved within weeks.
• Example 2 – DSP and hardship claim
  Mary, 52, receives the DSP and has been unemployed for 12 months. She applies through her fund for $5,000 hardship withdrawal to cover rent and utilities while her TPD claim is assessed. Approved quickly with Centrelink confirmation.
• Example 3 – Home modifications
  Ahmed, 38, needs a wheelchair and bathroom renovations. He applies to the ATO for compassionate release, supported by medical reports. $20,000 released to fund the works while his TPD claim remains pending.

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Pitfalls to avoid

• Thinking you can withdraw the full balance – Only limited amounts available until TPD is approved.
• Not checking fund rules – Some super funds impose stricter conditions.
• Missing evidence – Delays occur if Centrelink letters, medical reports, or invoices aren’t provided.
• Ignoring tax – Some withdrawals taxed like ordinary super withdrawals.
• Double-dipping – Disclose any hardship/compassionate withdrawals if your TPD claim is later approved.

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How to strengthen your application

• ✅ Get written Centrelink confirmation if applying for hardship.
• ✅ Gather medical reports, invoices and quotes for compassionate claims.
• ✅ Explain why expenses are reasonable and immediate.
• ✅ Contact your super fund early to confirm their rules.
• ✅ Seek legal/financial advice before lodging.

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Fast-track checklist: financial hardship and TPD

Action	Why it matters	Who to consult
✅ Check eligibility	Hardship requires 26 weeks on Centrelink	Centrelink / super fund
✅ Gather documents	Evidence is critical for approval	GP, specialists, ATO
✅ Apply early	Prevents worsening financial stress	Super fund / ATO
✅ Be realistic with amount	Only “reasonable and immediate” expenses covered	Financial adviser
✅ Seek advice	Protects long-term financial position	TPD lawyer / adviser

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FAQs

Can I withdraw my whole super while my TPD claim is pending?
No. Only hardship/compassionate amounts are available. Full release requires TPD approval.

Will early release affect my TPD claim outcome?
No. They are separate processes.

How long does early release take?
Compassionate claims via ATO can take weeks; hardship claims through funds may be quicker.

Is tax payable on early release?
Yes. Some payments taxed like normal super withdrawals.

Can I apply more than once?
Yes. But hardship withdrawals are capped once every 12 months. Compassionate depends on circumstances.

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Key takeaways

• You may access super early under financial hardship or compassionate grounds.
• This can provide temporary relief while your TPD claim is pending.
• Eligibility is strict – you need Centrelink confirmation, medical evidence or invoices.
• Full balance release is only possible once TPD is approved.
• Professional advice maximises your chance of success and protects your long-term super.

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TPD claims take time, but financial stress doesn’t wait. Early release of super under financial hardship or compassionate grounds can provide essential breathing room for you and your family.

At TPD Claims Lawyers, we help Australians not only secure TPD benefits but also navigate the financial pressures that come before approval. If you’re struggling while your claim is pending, contact us for a free, no-obligation consultation.