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Super for beginners, Part 9: If I retire and take my super, can I return to work?

July 19, 2012
By 13 Comments

Q: Hi I am 58 years old. Apparently you can get a lump sum of super before 60 if you have permanently retired. Can you still later look for work again? How do you prove you have permanently retired?

A: The question that you ask is in the top 10 questions that we receive at SuperGuide. The term ‘retirement’ and what that means for accessing super can mean many different things.

The short answer to your question is: generally yes, you can return to work after retiring, but at the time of retiring, the intention to retire must have been genuine. I explain this in more detail later in the response.

In the olden days, most women ‘retired’ when they married and men retired only when they turned 65. Indeed, until the 1980s, women could access their super benefits when they left work to have children because the presumption was that these women would never return to the workforce.

The world had changed a lot since then, and the concept of ‘retirement’ is now more fluid. Confusion over when someone is considered ‘retired’ has prompted dozens of questions from readers about retirement age, super access and returning to work after retiring. In this article, I answer the following three questions:

  • Can I retire at any age?
  • Can I return to work after retiring?
  • Can I access my preserved benefits if I’m still working?

Can I retire at any age?

An individual can retire at any age if they so wish, but for the purposes of accessing super benefits, you must have reached your preservation age and retired. For anyone born before 1 July 1960, preservation age is 55. What this means is that a person who has retired and who is aged 55 or over, can access super benefits.

‘Retired’ for the purposes of accessing super benefits means the trustees of the individual’s super fund are reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis. Note that ‘part-time’ is defined as working up to 30 hours a week and a minimum of 10 hours a week.

In other words, if a person’s intention is to work fewer than 10 hours a week, then that person can be considered to be retired. In nearly all cases, the super fund will request that the retiring individual sign a declaration stating that he or she never intends to be gainfully employed for more than 10 hours per week.

Note: Reducing your hours with the same employer, rather than ceasing employment, is not considered retiring. I explain this scenario in the article Does changing to part-time at 60 count as retiring?

Can I return to work after retiring?

Signing a retirement declaration doesn’t preclude returning to full-time work, or deciding to work part-time, if a person’s circumstances change. The declaration relates to the person’s current intention at the time of retiring. Personal or financial circumstances can change requiring individuals to return to the workforce. For example, the devastating effect of the GFC (global financial crisis) on pension investments in Australia and worldwide has forced many retirees to return to work.

Some public sector funds have special rules relating to ‘retiring’ from the public service. If you belong to one of the older public sector funds, then you need to check with your super fund about your retirement options.

Can I access my preserved super benefits if I’m still working?

Generally no, but like all rules there are some exceptions:

  • Reach the age of 65. If an individual has turned 65, he or she can access super benefits without retiring from the workforce. An individual can continue working full-time or part-time and start drawing down on super benefits.
  • Take a TRIP. If you have reached your preservation age (currently 55), then you can start a transition-to-retirement pension – what I call a TRIP. You can withdraw a maximum of 10% of your account balance each year, and you’re not permitted to withdraw additional lump sums. When you retire, or turn 65 (whichever comes first) however, you can have more flexibility when accessing your super benefits.
  • If you’re aged 60 or over, and cease an employment arrangement. If an individual resigns or otherwise ceases an employment arrangement after they have turned 60, then the rules permit the individual to access preserved super benefits. The rationale behind this exception is that most individuals ceasing employment at this age are more likely to be retiring than returning to the workforce.

Note one: Merely turning 60 doesn’t give you automatic access to your preserved super benefits. You must satisfy a condition of release, as discussed above and in the article Accessing super early: 12 legal reasons to cash your super.

Note two: If any of your super benefits are ‘unrestricted non-preserved’ benefits, then you can access these benefits at any time. I explain non-preserved benefits in the article Unrestricted access to super, sometimes.

Super for beginners, Part 9: If I retire and take my super, can I return to work? Super Guide

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Accessing super, Accessing super early, How super works, Retirement planning, Super for Beginners

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Comments

  1. Lewis Cunningham says:
    January 13, 2013 at 7:42 am

    Hi,

    I intend to take my pension at 55 ‘June 2014′. This is a final salary from a company I worked for 17 years and put in quite a bit each month (made redundant 2006 March). I get a lump sum and approx 11k per year thereafter. By doing this does it mean that the job I have at the moment I would need to leave, or can I draw on this pension and carry on working?.

    Regards
    Lewis

    Reply
    • Trish Power says:
      January 13, 2013 at 2:51 pm

      Hi Lewis
      Thanks for your comment. Generally speaking, a person retiring at age 55 will actually need to retire. You will need to check with your super fund about the particular rules, but in most cases (except if you have unrestricted non-preserved benefits, or turning 65) a person needs to retire to fully access super benefits. It may be worth chatting to your accountant about your entitlements as well since it was linked to a redundancy.
      Regards
      Trish

      Reply
  2. kalpen Tripathi says:
    June 12, 2012 at 1:35 pm

    Hi

    If one of the employee is paid 12% super guarantee rate rather than 9% percent. Does it has to be shown on the payment summary? In other words, is it reportable benefit on payment summary?
    Thank you
    Kal

    Reply
  3. Jon Mulder says:
    June 1, 2011 at 4:30 pm

    Please Help!!!

    Officially retired July 2010 aged 58……withdrew eligible tax free lump sum and in October will reach age “60″ meaning I qualify to withdraw remaining super “tax free”…..a current opportunity has me contemplating returning to work full time between now and the “60″ threshold…….if i did return to the work force I may no longer be able to excess remaining funds…….Help please…..Jon

    Reply
    • Trish Power says:
      June 8, 2011 at 10:21 am

      Hi Jon
      When a person retires, the super benefits become unrestricted non-preserved which means they can be accessed at any time, even if they later return to work. You will need to check with your super fund to confirm the status of your super benefits. If you return to work and you’re under 65, then any further contributions and earnings on those contributions will be preserved.
      Regards
      Trish

      Reply
  4. Belinda says:
    May 11, 2011 at 11:52 am

    I withdrew all of my super last year as I decided to retire and had reached the preservation age (I am 57). My circumstances have recently changed and I am going to need to return to work more than 10 hours a week. I understand if I return to work I can be taxed a very high percentage. What can I do to avoid that? What can I do to be able to re-enter the workforce again as a normal tax-payer?

    Thanks,
    Belinda

    Reply
  5. John Saward says:
    April 25, 2011 at 11:55 am

    Hello

    Thanks so much for this very clear information. I am 57 years old and self-employed through my own company. I am the only share-holder. The company has no employees.

    I consider retiring this year, and do intend not to work more than 10 hours per week in the future. I intend to take on less than 10 hours per week of consulting work, through my company.

    I note what you write above, that ‘Reducing your hours with the same employer, rather than ceasing employment, is not considered retiring.’

    Im my case then, would it be considered retiring. Or would I have to wind up the company?

    John

    Reply
  6. lainie mcnal says:
    February 8, 2011 at 6:41 pm

    Thank you for real answers after much searching …

    Reply
    • Trish Power says:
      March 3, 2011 at 12:26 pm

      No worries Lainie. Many thanks for taking the time to let us know that you found SuperGuide helpful.
      Why not tell your friends about SuperGuide?
      Regards
      Trish

      Reply
  7. Joel Spencer says:
    July 30, 2010 at 5:03 pm

    I have often wondered about this. Thank you so much for writing such a clear answer!

    — joel.

    Reply

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