The Shame of Financial Hardship

Written by: James S. on 29 March 2022

I used to work as a consultant for one of Australia’s largest Industry Superannuation Funds. Before this I had no prior experience in the financial sector, every day had been a new challenge, there was a lot to learn with regards to the rules and legislation of super and it’s probably in most people’s best interest to know at least some very basic things about how it works, especially when it comes to accessing it. 

As part of my job as a consultant for a superfund I’d heard a lot of heartbreaking stories from those in severe financial hardship. A lot of people feel that they need to tell a consultant why they’ve called and preface their questions that they don’t want to dip into their retirement savings but have no other choices. Illness, injury, disability, surgery, mortgage payments, rent, bills, needing legal aid, food. Just some of the many reasons that people seek assistance from their superfund. Centrelink payments alone can be so infrequent and minute and the service provided so shackled by purposeful underfunding and legislation that people need to seek out their superfund’s phone number and call for help. People felt that they need to apologise, that they were sorry for wasting my time with their situation and that they shouldn’t be doing this. Shame fuels a desire to justify their reason for calling and it really shouldn’t. It was my job to help, it was also my job to make sure we did this correctly, together.

As you can imagine, withdrawing super before retirement is not a simple task and will take time, something people in financial hardship tend to have very little of. As a consultant I needed to make sure that those wanting to withdraw met the legal eligibility criteria and completely understood the implications on accessing super for financial hardship. Each step of this process puts more mental load on the person calling about their situation, it’s not an easy task and maybe not the right decision for some. 

To access super for financial hardship the criteria is the following. First you need to be on Centrelink payments for 26 continuous weeks. Miss a single payment or get a part time job for a couple of weeks and that resets the clock. Not all payments from Centrelink are eligible either, which only adds to the confusion when different payment types have similar sounding names. Anyone currently in receipt of Centrelink payments has a Centrelink Reference Number or CRN. This is what is used by superfunds to determine that someone requesting access is on the right payments for the right amount of time. Superfund members will send in their CRN along with all their personal details, bank account details and certified ID to us for processing.

With your application you can request up to $10,000 for financial hardship from your super. That’s up to $10,000 no longer being invested for you and could have been years of progress made by previous work now suddenly undone. People need to go through all these steps, provide as much information as clearly as possible, hope they’ve met the correct criteria and then they can be approved for the release of their requested funds. An inelegant process that to the individual appears to be as difficult as possible for those who need the most help. The frustrations of this process don’t end here as well.

If you’re under 60 that’s going to be taxed at the withdrawal of around 20% plus the Medicare levy so if you request $10,000, that amount is not going to hit your bank account. This taxation catches people off guard, only adding to the stress of those who are desperate and need help. Super belongs to you for your retirement, so it feels like you’re being punished for accessing it when you need it before retirement and when you need it the most. This only feeds people’s shame about this process. So, with tax being withheld on the withdrawal the other major condition of this release is that you can also only request a payment for financial hardship once a year. Not a calendar or financial year, as in you need to wait 365 days from your last withdrawal if you need to do it again. So do you request the full $10,000 to last you as long as possible or go for a lower amount? Another question, another burden. 

When speaking with those wanting to go through this process, I tried to inform as much as possible, it was my job to be a messenger who relays a process that is embarrassing and tedious.

In television and internet commercials, super is sold to us as part of the dream of retirement, the proposal that while young you can invest in your future, scrimp and save away, have your money invested on your behalf in the market. If you work and sacrifice hard enough, you’ll get a big return and live out your golden years day-drinking and travelling. Super is a reflection of the decades of hard work you put yourself through and reward for participating in capitalism, selling your labour power and paying off your landlord’s mortgage. So, keeping on top of it is important because if you’re with a lower performing fund you’re going to have less to retire with.

Assistance should be there, implemented by the state, by and for the people because it’s for the best. Legislation around financial hardship should be for the benefit of uplifting those currently suffering. Superannuation is great if you benefit from capitalism and can make regular contributions to it, or if you sacrifice present wants and needs for a potentially more comfortable future for yourself. The capitalist and individualist society we are part of is the perfect kindling for the burning shame of people who can’t do this and feel they will never see the benefit of it. It’s easy to see how individualism can lead to selfishness when able to benefit from it but when you don’t that turns to shame instead. People are empowered to be selfish because they’re rewarded for it in neoliberalism. When that’s not rewarded, the empowerment of selfishness is replaced by shame and this was something that wasn’t apparent to me until I worked in super, now it seems obvious.

Individual blame on the individual for not being successful financially tends to be processed in two ways, shame and anger. Anger is another strong and justified emotion. Desperate people call their superfunds, wanting to know why the process is the way it is and I don’t have an answer for them that doesn’t come across as defending it or sounding especially cruel. I empathised and stayed on their side no matter any supposed justification, this fellow human being needs help to navigate a process designed to apply a band-aid to a bullet wound. How could I ever possibly defend legislation around this? 

It doesn’t have to be this way, this structure in our lives can be changed, moulded and controlled. Shame isn’t something you need to feel when you ask for help. Working in super and talking to people in need has galvanised me more in my political education than I could possibly have predicted. 

Hearing stories from people who are hurting who don’t deserve to be forgotten and discarded. Truly the only shame that should be around financial hardship should be on all those responsible for putting others through these hard times.

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