Accessing super early: Permanent departure from Australia (6 Q&As)

This article contains 6 examples of the most popular questions received by SuperGuide from Australian citizens and Australian permanent residents departing Australia, and who are seeking to access super benefits before retirement. If you’re a temporary resident of Australia then check out another SuperGuide article Accessing super early: Temporary resident of Australia.

The questions covered in this article are listed below (scroll down the page to read the responses):

  1. My son, 42 years old has moved permanently to the USA. He does not intend to return to Australia. We were told that he cannot access his super until retirement. Is this correct?
  2. I was a member of an Australian super fund in the 1990s. I have now left Australia permanently. Can I access my super benefits?
  3. My husband is not an Australian citizen, however he is a permanent resident. Can he access his superannuation, as we have moved to the US, and don’t know if we will be returning?
  4. I’m an Australian citizen but I’m leaving Australia permanently. Can I access my super?
  5. I’m leaving the country, AND taking out UK citizenship. Can I access my super?
  6. I live in Hong Kong. I am 56 and I want to cash my superannuation benefits to help finance an apartment. Is that possible? I don’t expect to return to Australia

1. Relocating to United States

Q: My son, 42 yrs old, has moved permanently to the USA. He has married an American lady and purchased a house etc. He does not intend to return to Australia. He has a small industry-based super a/c & we were told that he cannot access this until retirement. Is this correct?

A: I’m assuming your son was a permanent Australian resident and Australian citizen before he departed Australia’s sandy shores, rather than a temporary resident. Australian citizens who then relocate overseas are treated in the same way as Australians living in Australia: they cannot access preserved super benefits until they reach preservation age and retire, or satisfy another condition of release. (I explain the conditions of release in my article Accessing super early: 12 legal reasons to cash your super).

Preservation age for anyone born on or after 1 July 1960 is age 60, which is the preservation age for anyone aged 42. Preservation age ranges from age 55 (for those born before July 1960) through to age 60.

In the olden days (just under 15 years ago) it was possible to access your preserved super benefits when you left Australia permanently subject to meeting certain conditions. The rules were changed from July 1998 which now means that any Australian citizen who moves overseas permanently cannot access super benefits unless they satisfy a condition of release. The rationale for this policy is that Australian citizens may return to Australia to retire, or at least have the option of retiring in Australia.

Note: Temporary Australian residents who have visited the country under an eligible temporary resident visa (temporary visa listed under the Migration Act 1958, but not subclasses 405 and 410) can withdraw any super benefits (less tax) when the visa expires and when they leave Australia. If a temporary resident doesn’t claim any of his or her super benefits within six months of departing Australia, then the super fund will generally pay the super benefits to the Australian Tax Office (ATO). You then have to apply to the ATO for access to your super. You find more information about temporary residents accessing super benefits upon leaving Australia by reading Superannuation information for temporary residents departing Australia on the ATO website.

2. Pre-1999 super benefits

Q: I was a member of an Australian super fund in the 1990s. I have now left Australia permanently. Can I access my super benefits?

A: Maybe. If your super benefit includes a category of benefit known as ‘unrestricted non-preserved’, then you can access that portion of your benefit without having to satisfy another condition of release. See article Unrestricted access to super, sometimes.

3. Permanent resident leaving Australia

Q: My husband is not an Australian citizen, however he is a permanent resident. Can he access his superannuation, as we have moved to the US, and don’t know if we will be returning?

A: No, not if the reason an individual is seeking early release of super benefits is due to leaving Australia. Quoting directly from the ATO website:

“Australian and New Zealand citizens, permanent residents of Australia or holders of retirement visas generally cannot claim their super… because they have the option of retiring in Australia. However Australian and New Zealand citizen, and permanent Australian residents, are able to claim super money they earned while previously in Australia on a temporary visa if this money is now held by the Tax Office.”

Australian citizens and permanent Australian residents who then relocate overseas are treated in the same way as Australians living in Australia: they cannot access preserved super benefits until they reach preservation age and retire, or satisfy another condition of release.

4. Australian citizen leaving Australia forever

Q: I’m an Australian citizen but I’m leaving Australia permanently. Can I access my super?

A: No. See my response to Question 3.

If you have reached your preservation age (currently 55) when you depart Australia, or when you reach age 55 at a later stage, then you may be able to access super benefits subject to certain conditions. See SuperGuide article Accessing super early: Living overseas and over the age of 55.

Note: If you had been a temporary Australian resident rather than a permanent Australian resident, then you would have been able to access your super benefits (see article Accessing super early: Temporary resident).

5. Leaving Australia for the United Kingdom

Q: I’m leaving the country, AND taking out UK citizenship. Can I access my super?

A: No. Accessing super is not possible for the particular reason of permanent departure from Australia, if you are an Australian citizen, or a permanent resident of Australia. In the past, the fact that an individual was leaving Australia permanently was an acceptable condition of release. If you supplied sufficient evidence, such as permanent residence in another country, job details and even citizenship application, then it was possible to access a super benefit before retirement. This condition of release no longer applies.

6. Living outside Australia and over the age of 55

Q: I live in Hong Kong. I am 56 and I want to cash my superannuation benefits to help finance an apartment. Is that possible? I don’t expect to return to Australia.

A: No, not specifically for the purpose of buying property, but potentially yes for another reason.

Different rules regarding super access come into play when a fund member has reached their preservation age. Preservation age is currently 55 years (although steadily increasing to 60, depending on birth date), which means an individual can access super benefits provided they have retired from the workforce.

For an Australian living overseas, the rules are a little more complicated, although you should check the rules with your Australian super fund, or with the ATO.

Generally, an Australian living overseas, like Australians at home, who has reached the age of 55 can access his or her super benefits in Australia provided they provide documentary evidence to the fund that they have retired.

If an ex-pat is no longer a resident of Australia however, and aged 55 or over, I believe that provided the individual supplies documentation of overseas residency and that they are not employed in Australia, then super funds will consider releasing the super benefits. Again, you need to do your own research on your particular circumstances.

Note: Tax is generally payable on super benefits withdrawn before the age of 60.

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.


IMPORTANT: SuperGuide does not provide financial advice. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.

Comments

  1. I am a dual citizen (US and Australia). I have moved to the US permanently. What if I relinquish my Australian citizenship? Can I then access my Super?

  2. Hi,

    I have a friend who worked from 2001-2008 and has still not claimed her super annuation. She is currently receiving disability pension. Can you please advise about the best way to go about accessing her money?

    Thanks,
    Aisling

  3. [Not sure how to handle replies on this web site, but I'll give it a shot here.]

    In response to Peter’s reply to my reply:

    Peter,

    I apologize for my blinders. I am in my 70s, healthy, collecting minimum required retirement.. I am fortunate. For those in the opposite situation of not in good health (or not otherwise expecting long life) and not old enough to access super, it is a difficult, especially if (like you) they would like to use their super in their life time.

    Your problem, though, is not so much in the design of the basic super/pension system, but rather that your situation is not covered in the exceptions. Any granting of significant tax advantages has to protect against “regulatory leakage” by which some try to take benefits without meeting the primary qualification of actually using it for retirement. Exceptions such as hardship are easier to justify if the exception-granting process is relatively simple (clear-cut) and not subject to abuse. This is where, I believe, you and similarly situated people should focus efforts to come up with an easily applied test not subject to abuse.

    But recognise that this would be an exception to the underlying system of employer contributions supporting retirement. The funds, whether considered yours or not at the moment, is not taken by the govt, but rather, if you die before a condition of release, go to your beneficiary(ies). That doesn’t help you directly if you die early, but the govt would not be “taking” your money.

    Finally, although you posted under the topic of “departing Australia”, there is no discrimination as those in your situation staying in the country cannot get their retirement early, either. Thus, I believe that your complaint would have a larger class (i.e., more clout) by focusing on the exception aspect rather than the departing aspect.

  4. Peter Scott says:

    In response to Bob T-S

    Dear Bob, unfortunately on both sides of my family heart disease is very common and therefore the chances of me living past retirement age are extremely thin.

    I should have the right to make use of this money to buy a first home in NZ now (especially since other NZ citizens on a kiwisaver scheme enjoy this right by law)

    There is quite a number of people out there who are not particularly interested in living past 65 years old (for whatever reason) I think it’s a gross abuse of their human rights that the Australian government does not allow them to use their superannuation money while they are alive.

  5. In response to Peter Scott’s conclusion: “What a despicable country we live in, they won’t even let us touch our own money. That is just fascist and pathetic”

    With all due respect, he is forgetting an important point. The govt isn’t taking the money; it remains in his super account to be drawn on in retirement. This is tax sheltered money allowed by the govt for purposes of retirement, only. And the quid pro quo is that we cannot do with it as we please. The govt has a valid interest in preventing super tax concessions leaking to non-super purposes.

    Relocating even permanently out of the country shouldn’t break the commitment for retirement. Furthermore, it isn’t “our” money. The mandatory contribution is paid by the employer, not the employee. And to the extent that the employee salary sacrifices or makes non-concessional contributions, that is the employee’s free choice and the employee gets back valuable tax breaks (see 1st paragraph).

    My wife and I have many pension accounts in a total of 3 countries (the worst is the US where each employer has its own plan and merging of 401(k), 457s, IRAs, etc. is limited and cumbersome). As we are entering retirement, we are tapping each fund as allowed/required by respective countries’ rules. Its a bit of a hassle (but, hey, isn’t that a good use of the free time of retirement + keeps the mind active), but it is OUR money for RETIREMENT, not a free pass to break open that piggy bank early just because we depart Australia.

    Frankly, the current super system took Australia from being one of the highest taxed developed country for retirees to what may be the lowest – no tax on anything in pension phase if planned properly, essentially invisible to the tax system. That’s not despicable, fascist or pathetic. . .but rather taxpayer-friendly and forward looking. Conversely, the overarching policy issue I see (and I know that this is sensitive issue) is that the govt may have given too much away and has had the tax base eroded too much.

  6. Peter Scott says:

    People (Especially Australians and New Zealanders planning to retire in NZ)

    I just found out the answer to my question and it’s not pretty. Basically it says that even though we can transfer our superannuation to the kiwisaver scheme if we were to move to NZ you still won’t be able to access any of the money so this new legislation is useless.

    Transferred savings must be separately identifiable within the receiving country account, to allow administrations to insist Australian-sourced components in KiwiSaver cannot be used to purchase a first home, cannot be transferred to a third country but can be accessed on retirement from age 60.

    What a despicable country we live in, they won’t even let us touch our own money. That is just fascist and pathetic

  7. Hello, great website you have!

    My question is:

    I am a member of the Hesta superfund.

    I have not lived in Australia for 8 years as I married an Englishman and live in London with our baby son.

    I have no plans to return to live in Australia as I am becoming an UK citizen.

    What can I do with my super fund? I haven’t paid into it for years and don’t want to send money from here into it. Is it possible to roll it over to my mothers super? Or how can I draw on it?

    Thank you.

  8. Hi Trish,

    I lived in Australia for five years on a student and graduate working visa. I left Australia last year and collected my super with paying the 35% withholding tax. My question is whether I can claim back that withholding tax on my ATO tax return or the ATO will not refund that 35% Any help regarding this is greatly appreciated.

    Cheers,
    Mike

  9. shirish says:

    Q: My friend citizen of Australia and he leaved 10 years there and now he came india. He is eligible for super withdrawal?
    Also his age is now 34.

  10. Hi Trish,

    First of all great article! Hopefully the thread is still active but here is my situation.

    I’ve moved to Australia last year on a permanent skilled visa which expires after 5 years (expires 2016). After that time I may, or may not, choose to take up the option of citizenship. If I do take up citizenship I guess I would have to wait for retirement age to access super. However if I leave the country, forfeit my option to citizenship, would I be able to withdraw my funds on leaving? If so what would there be a penalty? If not what would happen to my fund when I move home? Really hoping that the contributions I am making is effectively not dead money to me if I leave the country.

    Thanks so much in advance for advice.

    Dave

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