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 below).
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 -30 June 1961||56|
|1 July 1961 - 30 June 1962||57|
|1 July 1962 - 30 June 1963||58|
|1 July 1963 - 30 June 1964||59|
|After 30 June 1964||60|
Other conditions of release include:
- Transition to retirement – income stream only;
- Changing a condition of employment after age 60;
- Severe financial hardship;
- Permanent incapacity;
- Temporary incapacity;
- Compassionate grounds;
- Terminal illness; and
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 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.
If you have reached your preservation age, are still working, under age 65 and want additional tax effective income you can commence a non-commutable income stream from your superannuation fund, even if your benefits are fully preserved. The maximum income that can be drawn is 10% of the account balance at commencement and then 10% of the balance as at 1 July in successive financial years. The minimum drawdown amount is 4% of the account balance as at the start of the financial year. On retirement or at age 65 (whichever comes first) the income stream converts to the retirement phase.
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’.
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.
Beware of Scams
There are schemes that purport to offer early access to superannuation. There are limited legal circumstances that allow you to access your super early. Services that offer early access outside these circumstances are illegal and expensive. If you are considering accessing your superannuation benefits speak with your licensed financial adviser or your fund and ask if what was offered is legal and possible. Should they claim it is not or you suspect it is illegal contact the Australian Securities and Investments Commission (ASIC) on 1300 300 630, the Australian Taxation Office (ATO) on 13 10 20, visit the Australian Competition and Consumer Commission’s (ACCC) ‘SCAMwatch’ at www.scamwatch.gov.au or your local Office of Fair Trading to report your concerns.