Accessing Superannuation Benefits
Meeting a "Condition of Release"
Elsewhere we have provided an overview of when superannuation can be accessed and illustrated that access to superannuation is largely dependent on meeting a minimum age requirement, "preservation age", and a "condition of release". We now focus on providing more details around these individual conditions of release, listed below. Remember however that the tax implications associated with access may vary considerably, so do your research and seek specific advice as required:
- You have reached age 65
- You have reached preservation age and retired
- You are aged 60 - 64 and ceased an employment arrangement
- You have reached preservation age and commence a Transition to Retirement (TRIP) pension
- Terminal Illness
- Compassionate Grounds
- Severe Financial Hardship
- Permanent Disability or Incapacity
- Temporary Incapacity
- Non Preserved Benefits (pre 1999)
- Preserved Benefits of less than $200
- Choosing a Lifetime Pension/Annuity (limited to specific funds)
- Covid 19 early release of super
- Departing Australia Superannuation Payment (DASP)
Once you reach 65 you have unrestricted access to your super funds and you may access your benefits at any time, and you may continue in employment without the need to retire. Any benefits can be paid either as an income stream or as a lump sum and an individual can maintain their super account as long as they like.
You can access your superannuation when you reach preservation age, cease employment and have no intention to become employed in the future. As part of this process your individual superannuation will normally require you to complete a retirement declaration confirming that you have retired. Commencing employment at some later stage, prior to age 65, will typically not impact your continuing access to superannuation, but any superannuation contributions from your new employment will need to go into the new accumulation fund.
If you are aged between 60 and 64 and you cease an employment arrangement, then you are entitled to access all benefits accrued up until that point in time. You cannot access any benefits which accrue after this point in time - perhaps associated with new employment - until you again cease employment again.
Subject to you having reached your preservation age and your fund being able to pay a TRIP, you can receive an income stream while continuing to work and prior to retirement. The amount paid each year must meet a specified minimum (typically 4% below age 65) and not exceed 10% of the account balance at the commencement of the TRIP and on 1 July of each following year.
When a member dies the superannuation fund generally pays a death benefit to their estate, dependent or other beneficiaries. If the recipient is a dependent of the deceased, the benefit can be paid as a lump sum or income stream - and any income stream can either be new or a continuation of an existing income stream. If the recipient is not a dependent of the deceased, the death benefit must be paid as a lump sum and there will likely be tax consequences.
If a super member has a terminal medical condition and this is supported by two medical professionals certifying that the condition is likely to result in the member’s death within the next 24 months, the balance of their super account may be paid as a tax-free lump sum benefit. Note that at least one of the registered medical practitioners must be a specialist practicing in an area related to the illness or injury suffered by the person and any certificate provided must be current. There are no cashing restrictions.
Superannuation benefits may be released on specified compassionate grounds if a member has to:
- pay for medical or dental treatment, for either themselves or a dependent or pay for transport to the treatment
- prevent their home from being sold by the lender that holds the mortgage
- modify their home or vehicle to accommodate their own needs, or the needs of a dependent, for a severe disability
- pay for palliative care for themselves or a dependent with a terminal medical condition
- pay for expenses associated with a dependent’s death, funeral or burial
You have to apply to the Australian Taxation Office (ATO), rather than to your super fund, for early release on compassionate grounds and you are not necessarily entitled to the full balance - the amount is limited to what is reasonably needed and the amount is taxed as a normal lump sum payment.
Please note that you are not eligible to apply for a payment on compassionate grounds if you are a temporary resident in Australia.
You may be able to withdraw some of your super if 1) you have received government income support payments continuously for 26 weeks and 2) are unable to meet reasonable and immediate family living expenses. The minimum amount that can be paid is $1,000 and the maximum amount is $10,000; with only one withdrawal for severe financial hardship possible in any 12-month period. These withdrawals are paid and taxed as a normal super lump sum and applications should be made directly to your super fund.
You may be able to access your superannuation if you can satisfy the Trustees of your super fund that your, "ill-health (whether physical or mental) makes it unlikely that the member will engage in gainful employment for which the member is reasonably qualified by education, training or experience” (Regulation 1.03C of the SIS Regulations).
Consistent with the requirement above in respect of terminal illnesses, satisfying the Trustees will normally require separate certification from two doctors certifying that your permanent incapacity meets the requirements in the regulations. Check with your fund to see whether you have insurance covering permanent disability; if so you may be entitled to increased benefits.
You may be able to access your superannuation if you can satisfy the Trustees that ill-health (whether physical or mental) has caused you to be cease employment although it "does not constitute permanent incapacity" - (Regulation 6.01(2) of the SIS Regulations). Note that not all super funds support access of this nature and you should check whether you have some income protection insurance through the fund.
Although there does not seem to be an express legal requirement for two doctors to certify that you are temporarily unable to carry out gainful employment the fund Trustee is likely to require such supporting evidence. In the ATO's view the temporary incapacity benefits, "may be paid only from the insured benefits or voluntary employer funded benefits", and may only be paid as an income stream.
All contributions made to super since 30 June have been "preserved" benefits, with access subject to meeting a "condition of release". However, individuals can have "unpreserved benefits" which may be accessible prior to retirement (they will be noted on your regular fund statements) which typically relate to employment prior to 1999 and they can take two forms:
- Restricted non-preserved benefits - these generally can't be accessed until the individual member meets a condition of release specifically attaching to these benefits - for example, ceasing employment with a specific employer.
- Unrestricted non-preserved benefits - these benefits don't require a condition of release to be met and are accessible at any time.
You may be able to access your super if you change employers and the balance in your super account is less than $200 or if you have lost super that is held by a super fund and the balance is less than $200.
As long as you are prepared to take your superannuation in the form of a lifetime pension or annuity - which cannot be commuted to lump sum - subject to the rules of your superannuation trust fund permitting. In practice, this option is only available to members of older, public service funds.
In an effort to reduce the financial impact of Covid 19 on Australian families, the government introduced measures which allow access of up to $10,000 of superannuation in 2019–20 and a further $10,000 in 2020–21 - subject to meeting certain eligibility requirements. No tax is payable in relation to these payments, and the money withdrawn is not taken into account in relation to any income or means tests.
Under the Temporary Residents’ Superannuation Legislation Amendment Act 2008 a temporary resident (who is not an Australian citizen, New Zealand citizen or a permanent resident) whose temporary visa has ceased to have effect can claim their Departing Australia Superannuation Payment (DASP) from their super fund within 6 months of their departure from Australia. Currently this provides full access to superannuation benefits less a tax of 35% (more tax applies if the individual has been on a working holiday visa) and a claim can be made online through the Australian Tax Office's DASP facility.