When Can I Access My Superannuation?

The majority of the time you can access your superannuation when you retire provided that you are over 60 years of age. That being said, there are a few ways of access your superannuation earlier than that if you meet specific conditions explored below. This article does not cover capped defined income streams which are quite rare these days and 99% of the population will never see.

When can I access my super?

The magical age is 65. Turning 65 is a “condition of release” without any cashing requirements. This simply means when you turn 65 you can withdraw your super as a lump sum or a pension at any time. There are four basic conditions of release being:

• Being between 60-64 years old and retiring or permanently retired
• Starting a transition-to-retirement income stream (TRIS) between ages 60-64
• Aged 65 or over
• Death

Provided you meet eligibility guidelines early release of super is legally available based on other “conditions of release” in addition to those already outlined above. The more significant conditions of release include:

• On compassionate grounds
• Suffering severe financial hardship
• Being diagnosed with a terminal medical condition
• Temporary or permanent incapacity

 Understanding Preservation

Fundamentally, super is provided for the purposes of a member’s retirement. Super is locked away or preserved until you satisfy a condition of release.

The preservation age is attaining the age of 60.

The importance of turning 60 – Preservation Age

Turning the age of 60 allows you to access super for the following purposes:

• starting a TRIS – it is important to understand the earnings built up in a TRIS are all preserved and whilst you can withdraw pension payments you cannot withdraw a lump sum payment (subject to limited circumstances such as paying excess contributions subject to a release authority)
• ceased gainful employment (stop working) after turning 60 is a condition of release allowing access to super but important to note that if you are not permanently retired and under 65 any future contributions and earnings are preserved until you stop working again, retire permanently or turn 65
  • Sam resigned from a full-time position working as a train driver when he turned 60 and formally advised his SMSF trustee he wanted to take a lump sum and go on an extended overseas holiday and take an account-based pension with part of his remaining accumulation balance. Sam is not permanently retired as he has the intention of becoming employed again when he returns from his overseas trip. This means he can access all of his super in his SMSF when he turned 60 and his super balance at that time is transferred to unrestricted non preserved (UUNP) status and does not change even when he resumes work. As his pension is a retirement phase all future earnings retain their UJUNP status. However, future earnings on his remaining accumulation account and future contributions when he starts working again are fully preserved and locked away until he changes jobs, stops working permanently with no intention to work again or he turns 65.
• turning 60 and permanently retired – a member stops working and does not intend to work in the future for 10 or more hours AND has ceased gainful employment in the past has unrestricted access to their super balance
• Sarah has never been employed in the past, not even a job at McDonalds in her younger days and therefore cannot cease gainful employment and cannot meet the definition of being retired after she turns 60 but will meet that definition when she turns 65 and can access her super.
• Kyle turned 63 and ceased working as an accountant. He did not intend to work again in the future. He met the condition of retirement as he made a declaration to his SMSF trustee to formally advise them he had no intention of being gainfully employed in the future. After 12 months of lounging around he was bored and decided to seek part-time employment. His circumstances changed when he started to seek gainful employment which would be more than 10 hours per week. He stopped meeting the definition of retirement as he had the intention of being gainfully employed in the future and he was still under 65. All of his super balance up to the date he changed his intention remains UUNP and fully accessible. Contributions and earnings (only on his accumulation balance) are preserved until he turns 65 or he ceases work again before he turns 65.

How is my Super taxed when it is released?

Super benefits received when 60 or over

Lump sum super payments and pension payments are tax free when an SMSF member turns 60.

Early release from super – under 60

If you meet the eligibility criteria to legally access your super as an early release of super payment and you are under 60 personal tax may apply. The amount of tax depends on the grounds of release requested and the type of payment being made.

Early Release Super grounds	Lump Sum (Inc Medicare)	Pension (Inc Medicare)
Compassionate grounds	The member’s marginal tax rate or 22% whichever is less- tax-free component is not taxed	N/A
Severe financial hardship	“as above”	N/A
Diagnosed with a terminal medical condition	Tax-free lump sum payments provided it is paid within 24 months of certification	Tax free component of an income stream remains tax free and the taxed component is subject to tax at the member’s marginal tax rate
Temporary incapacity	Where paid as income protection insurance the payments are added to the member’s assessable income and taxed at the member’s normal income tax rates	Income received directly from the fund is taxed as a superannuation income stream – the tax free component remains tax free and the taxed component is subject to tax at the member’s marginal tax rate
Permanent incapacity	The tax-free component is not taxed and a special formula applies to uplift the tax-free amount subject to the age of the member when they became incapacitated. The taxed component is taxed at 22% or marginal tax rate whichever is less	Is taxed as a disability income stream – the tax-free component remains tax free and the taxed component if taxed at the member’s marginal tax rate with a 15% offset

# The above table does not address untaxed components as they are rare in an SMSF.

Death Benefits

Tax payable on a super death benefit depends on whether the recipient is classified as a tax dependant or a non-dependant, whether the benefit is paid as a lump sum or a pension, the underlying tax components and the age of the deceased member and the recipient.

Type of Super Death Benefit	Paid to tax dependants ##	Paid to a non-dependant
Lump sum	Tax free any age	Tax free component remains tax free when paid. The taxed component is taxed at a maximum rate of 17% (incl Medicare) any age
Account-based income stream	1.      Deceased is 60 or over and the beneficiary is any age – tax free 2.      Deceased any age and the beneficiary is 60 years or over – tax free 3.      The deceased and the beneficiary are under 60 -taxed at the beneficiary’s marginal tax rate with a 15% tax offset	SIS rules do not allow a death benefit income stream to be paid to a non-dependant

# The above table does not address untaxed components as they are rare in an SMSF.

## A member’s tax dependants are determined at the date of their death and include the deceased member’s:

• spouse (de facto or same sex)
• former spouse (de facto)
• children under 18
• someone whom they had an interdependency relationship
• someone who was financially dependent on them
• someone receiving a death benefit because the member died in the line of duty as a member of the defence force, Australian Federal Police or a state police force or as a protective service officer

Only lump sum super death benefits can be paid to the member’s estate, and the executor of the estate is responsible for deducting the appropriate PAYG withholding tax when it is distributed to the member’s beneficiaries.