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- Can you just change to part-time employment?
- How do you apply for your super when you cease employment?
- Are there limitations on how you access your super when you cease employment after 60?
- What are the tax implications?
- Can you change your mind and go back to work later?
- Other conditions of release
- The bottom line
Accessing your super becomes more attractive once you turn 60. Not only are withdrawals tax free, but the definition of stopping work is more flexible.
Ceasing employment after you reach the age of 60 is a condition of release, or one way you that you can access your super in Australia. But where super is concerned, there is a material difference between ceasing employment and retiring.
Ceasing employment or retiring: What’s the difference?
Ceasing employment means leaving a job, even if you get a job with another employer. And if you do get another job, you can only access the super benefits you’ve accumulated up to that point in time. Any super you accumulate with your new employer must be preserved until you meet another super condition of release (such as turning 65).
Retiring, on the other hand, is more final. To satisfy the retirement provisions of Australia’s super legislation you must:
- Have reached your preservation age
- Have ceased gainful employment
- Not have any intention of becoming gainfully employed again in the future.
Being gainfully employed means receiving any sort of monetary reward for working at least ten hours a week.
Note though that if you have two jobs you only need to cease one employment arrangement to meet this super condition of release. You can continue working in your other job.
Can you just change to part-time employment?
If you’re aged over 60, you can work part time and still access your super, provided the role is with a new employer, not the employer you left to meet your ‘ceasing employment’ condition of release.
Part-time work is classed as 10 to 30 hours a week in Australia.
How do you apply for your super when you cease employment?
This varies from fund to fund, but most require you to sign a form declaring you have met the ceased employment condition of release. They may also require a declaration from your employer.
You must also provide appropriate proof of identity before any of your super will be released after you’ve ceased employment.
It’s important to understand that trustees of super funds (including self-managed super funds) need to comply with super legislation when paying benefits to fund members. Failure to do so can lead to harsh penalties being imposed by the Australian Taxation Office (ATO).
Are there limitations on how you access your super when you cease employment after 60?
No, there’s not.
When you’re eligible to access your super because you’ve met the ceased employment condition of release, you can choose to take your super payments as a lump sum, as an income stream (also known as a superannuation pension) or as a combination of the two.
What are the tax implications?
When you cease employment after the age of 60 you can withdraw your super tax free, regardless of whether you receive lump sum payments, an income stream or a bit of both.
Can you change your mind and go back to work later?
Yes, you can. You can even get a job with a new employer straight away.
The only criterion to meet this condition of release is to cease an employment arrangement with one current employer after you turn 60.
However, if you’re 67 or older and you go back to work with a new employer, you’ll only be able to make further contributions to your super fund if you satisfy the work test and you’re no older than 74. To satisfy the work test, you must work a minimum of 40 hours in any consecutive period of 30 days.
Other conditions of release
Besides ceasing employment after age 60, other common superannuation conditions of release are:
- Retiring from the workforce after you reach your preservation age. Your preservation age is between the ages of 55 and 60, depending on your date of birth
- Reaching your preservation age and beginning a transition-to-retirement income stream (TTR or TRIS)
- Turning 65, even if you haven’t retired
You can also access part of your super prior to reaching your preservation age in special circumstances, such as:
- If you become permanently or temporarily incapacitated
- If you’re suffering severe financial hardship or from a terminal medical condition
- On compassionate grounds.
And for a limited time only, you can access up to $20,000 of your super early due to COVID-19.
Ceasing employment after the age of 60 is one of the ways you can access your super. You can return to the workforce with another employer any time if you want. If you have two jobs, you still meet this super condition of release if you cease your employment with one of your employers.
The information contained in this article is general in nature.