Why Accessing your Super Early Might Be the Wrong Move

Early superannuation withdrawal isn’t just reserved for Coronavirus-related emergencies. In fact, it can also be accessed during other times of high financial stress.

If you’re in a struggle to repay your debts, you could be contemplating using some of this retirement money for those payments. You might think your super is a great source of funds to get out of debt and a financial bind.

Your super is a tool to prepare for your retirement. While it seems harmless to rely on it when you need it most, you’d be risking the funds you’ll need to live when you retire.

Claiming Super Early

When is the time to withdraw your superannuation? Supposedly, the money is reserved for your retirement, but there are grounds when you may be allowed to tap into these funds early.

With Compassionate Grounds, it’s meant to prevent repossession of your home because of unpaid mortgage. Accessing your super early could also be allowed to pay for important costs like disability, medical care, or funeral expenses.

Another ground is Severe Financial Hardship, such as loan repayment, car repairs, rent arrears, and outstanding bills.

However, you need to prove financial hardship by providing supporting documents and information. The process can be time-consuming, and there are other options you should take before an early release of superannuation.

Why you Shouldn’t Release Superannuation Early to Repay Debt

Truth is, dipping into your superannuation to repay debt is a bad move. Claiming super early to pay off a loan is risky as you’re decreasing the amount of money for your retirement. That’s not an effective long term debt management strategy.

Just because you can, doesn’t mean you should. Perhaps you could look at alternatives, such as debt consolidation, building an emergency fund, budgeting, and more.

Debt Consolidation

There are numerous debt solutions that don’t require claiming your super early. Debt consolidation, debt arrangements, and other options are there for you to utilise if you need to.

Debt consolidation is combining debts into a single loan. Usually, it has more favorable terms, such as lower interest rates or monthly repayments, or both.

Building an Emergency Fund

Another important tip to avoid needing cash for unexpected financial difficulties is to build an emergency fund. Saving for emergencies is a better option than claiming your super early.

You should have at least $500 in a savings account for life’s unexpected occurrences. It will keep you above water for a while.

Budgeting Correctly

Make sure you are properly budgeting every month and making your repayments accordingly. Learning how to budget correctly could help cut down the unnecessary spending and free up more funds to repay your debt.

How Cigno Loans Can Help

Thinking of using your superannuation early as a temporary solution to get out of debt can be tempting. However, that money is intended for when you retire, so it’s better to keep it that way.

Cigno Loans can help you make those payments without touching your super. Contact our team today to learn about how you can repay your debt using the various loan types that we offer.

Check out more Cigno Loan Types

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.


Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice – Moneysmart.gov.au.

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat