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Superannuation has many benefits, primarily its potential to provide you with a source of income in retirement. But like everything to do with super, the benefits are obscured by layers of jargon, beginning with the word ‘benefits’.
In super parlance, benefits refer to the funds you accumulate in your super account. Broadly speaking, these benefits are designed to be preserved until you retire or start making withdrawals from your super.
Preserved benefits include all contributions made by you (or on your behalf, such as the Superannuation Guarantee payments made by your employer) since 30 June 1999, as well as all of the earnings on your super investments since that date.
These preserved benefits cannot be accessed until you have met a condition of release. In other words, they must be preserved, usually until you reach your preservation age. Your preservation age will be between the ages of 55 and 60, depending on your date of birth.
So far, so good, but it doesn’t end there. Some super benefits don’t need to be preserved. You guessed it – these benefits are classified as unpreserved or non-preserved.
Types of non-preserved benefits
There are two basic types of non-preserved benefits: unrestricted and restricted.
1. Unrestricted non-preserved benefits
Unrestricted non-preserved benefits are the most common type of non-preserved benefits. They include any benefits that may be paid on demand by your super fund because you have already satisfied a condition of release, such as:
- Being aged over the preservation age and retiring.
- Being aged over the preservation age and starting a transition-to-retirement income stream (TRIS)
- Being aged over 60 and ceasing an employment arrangement
- Being aged 65 or over, even if you are still working.
In short, if you meet a condition of release and keep money in your super fund, you have unrestricted non-preserved benefits.
Some eligible termination benefits received prior to 1 July 2004 are also unrestricted non-preserved benefits.
2. Restricted non-preserved benefits
Restricted non-preserved benefits include any employment-related contributions you may have made before 1 July 1999, excluding employer contributions.
If you have restricted non-preserved benefits, you can’t access them until the employment arrangement they relate to has been terminated.
How can I find out if I have unrestricted non-preserved super?
You’ll likely have unrestricted non-preserved super if you have ever been a member of a super fund and you have satisfied a condition of release.
The easiest way to find out the amount of unrestricted non-preserved super available to you is to log into your super account(s) and search under ‘benefit estimate’. You should be directed to a breakdown of the preserved and non-preserved (restricted and unrestricted) components of your super balance.
How can I withdraw unrestricted non-preserved super?
If you have unrestricted non-preserved super, you can apply to your super fund to have the money released as either a lump sum or a pension.
While super withdrawals are generally tax free in retirement, there may be some tax to pay depending on the condition of release. For example, if you access your super after reaching your preservation age and retire before turning 60, any super payments you receive will be subject to tax. However, if you wait to access your super benefits until after you turn 60, they’ll be tax free.
Non-preserved super benefits can be either unrestricted or restricted. Unrestricted non-preserved benefits are the most common type. You will have these benefits if you are a member of a super fund and have satisfied a condition of release. If you do, you’ll be able to access your super on demand as either a lump sum or a pension.
The information contained in this article is general in nature.