Withdrawing your super

The ability for you to access your money in a superannuation fund depends on when and by whom the money was contributed and whether certain conditions, known as ‘Conditions of Release’, are satisfied. The various conditions impose different withdrawal restrictions.  

The most common conditions of release are turning age 65 or retiring after reaching preservation age, with no intention to ever return to gainful employment. The minimum preservation age depends on your date of birth (see table below).

Other conditions of release include:  

• Transition to retirement – income stream only;
• Changing a condition of employment after age 60;
• Severe financial hardship;
• Compassionate grounds;
• Permanent incapacity;
• Temporary incapacity;
• Terminal illness; and death.  

Several of the conditions listed above have further restrictions and qualifications to obtain the benefits. 

Retirement is defined as:

• In the case of a person who has reached their preservation age, an arrangement under which they were gainfully employed has come to an end and the fund trustee is satisfied they intend never to become gainfully employed on either a full-time or part-time basis; or
• In the case of a person over 60 years of age the arrangement under which they were gainfully employed has come to an end on or after they attained 60 years of age. This means that they may change from full-time to part-time work and access the benefits they held in superannuation up until the date of that change. Contributions made after that date would be preserved until a further condition of release is satisfied. At the time of change there must be a total break of employment – i.e. all long service leave and other payments due must be paid out and appropriate taxes paid. It is not sufficient to cease employment on a full time basis and commence part time, retaining all previously accumulated benefits.

This is an ‘unconditional’ condition of release and when this occurs you can access your superannuation as a lump sum or an income stream even if you continue to work.

If you have money in both the accumulation phase and pension phase and need to make a lump withdrawal, you should seek financial advice about which one you should take it from.

You may be able to access a limited amount of your superannuation benefits if you are considered to be in severe financial hardship. To qualify you must meet certain conditions that include receiving specific Government Income Support payments for at least 26 weeks or 39 weeks if you’ve reached preservation age. Please note not all super funds will allow access due to Severe Financial Hardship. For more information and to apply contact your fund.

Access to superannuation may be available on compassionate grounds to meet costs for various medical expenses, palliative care and funeral expenses. Application can be made with the Australian Taxation Office (ATO). For more information visit the ATO website at www.ato.gov.au and search ‘withdrawing super compassionate grounds’.

This condition of release is satisfied if your fund rules allow release because of permanent incapacity and you have ceased gainful employment – which means that you are gainfully employed for less than 10 hours per week and the trustee of the fund is satisfied that it is unlikely, because of your incapacity, you will ever be able to work again in your field of expertise.

You may be able to access all your superannuation benefits if you have been diagnosed with a terminal medical condition. For more information contact your fund.

Preserved benefits include employer contributions, member contributions and investment earnings which cannot be accessed as a lump sum until a condition of release has been met. After preservation age and if still gainfully employed preserved benefits can be accessed as a non-commutable Transition to Retirement Income Stream pending retirement or turning 65. (see Transition to Retirement – above).

The rules applying to restricted non-preserved benefits are the same as preserved benefits except for one key exception. Restricted non-preserved benefits can be cashed on termination of gainful employment with an employer who had at any time contributed to the regulated superannuation fund. These benefits are effectively pre 1 July 1999 member contributions and earnings as well as employer contributions and earnings above or pre-dating super guarantee (SG) and/or award requirements.

The feature of unrestricted non-preserved benefits is that they may be cashed, in whole or part, at any time subject to the payment of applicable tax. These are generally amounts for which a condition of release has previously been met but for whatever reason are still left in the super fund.