When can super benefits be accessed?

Posted 1 Dec '19

When can super benefits be accessed?

By Vicky Richards

Do you know what super benefits you can access, and the conditions of release?

Superannuation can only be accessed upon the occurrence of specific events known as conditions of release. In most cases, access to superannuation is age or retirement related. However, early release of superannuation benefits is permitted in limited circumstances such as terminal medical condition, severe financial hardship and compassionate grounds.

The accessing of superannuation benefits before meeting a condition of release is essentially an illegal early release of superannuation benefits. If you illegally access your super early, fees and severe penalties apply. These penalties can also apply to promoters that encourage illegal early withdrawal of super.

If you satisfy a condition of release, any benefits that have accrued up to that point in time can be accessed as either a lump sum or as a pension.

Retirement

Once an individual reaches their preservation age and retires, they are able to access their superannuation benefits without restriction.

Generally, an individual will be considered ‘retired’ under superannuation law if one of the following tests apply:

1. If the individual has reached preservation age but is still under age 60, retirement occurs if they have ceased an employment arrangement and the super fund trustee is satisfied they do not intend to be gainfully employed for more than 10 hours per week in the future.
2. If the individual is aged 60 or more, retirement occurs if they have ceased an employment arrangement, on or after reaching the age of 60.

Your preservation age depends on what date you were born and this varies from 55 years of age to 60 years.

Attaining age 65

A member who reaches age 65 may cash their benefits at any time. There are no cashing restrictions after age 65.

Early release of super

Government legislation allows for the early release of super benefits before preservation age in very restricted circumstances:

• severe financial hardship (if you have received eligible government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate family living expenses)
• compassionate grounds (paying for medical treatment for you or a dependant, making a payment on a loan to prevent you from losing your house, modifying your home or vehicle for the special needs of you or a dependant because of a severe disability or paying for expenses associated with a death, funeral or burial of a dependant)
• terminal medical condition
• temporary incapacity
• permanent incapacity
• super less than $200
• first home super saver scheme
• permanently departing from Australia, having been a temporary resident

Members must meet very strict government criteria before benefits can be paid out in these circumstances. 

Transition to retirement income streams

Taxpayers who have reached their preservation age may continue to work and receive a superannuation transition to retirement income stream (TRIS) before meeting the “retirement” condition of release.  Your preservation age depends on what date you were born and this varies from 55 years of age to 60 years.

Commencing a TRIS may allow a member to reduce their working hours and maintain their income by topping up their part-time income with a regular ‘income stream’ from their SMSF.  However, a member does not need to cut back their employment earnings in order to commence a TRIS.