Q: My husband just turned 60 years of age, and he has $80,000 in his super fund. We would like to withdraw his entire super as we need the funds to purchase a house. He is currently employed full-time and will be working for many years yet. We have sent the super fund all the documents to receive the funds, but they are now saying that he has to resign from his current employer before he can receive the money from the super. We thought that because he is 60 years of age he is legally entitled to the money. Can he still receive the super if he is working full time?
A: Reaching the age of 60 doesn’t automatically entitle a super fund member to withdraw his or her super benefits. Generally speaking, an individual must have reached his or preservation age AND have retired.
Preservation age is now at least 59 years, although if you were born before July 1960, your preservation age is 55 years. Briefly, your preservation age is based on your date of birth, and is worked out as follows:
- If you were born after June 1960 and before July 1961, your preservation age is 56 years
- If you were born after June 1961 but before July 1962, your preservation age is 57
- If you were born after June 1962 but before July 1963, your preservation age is 58
- If you were born after June 1963 but before July 1964, your preservation age is 59
- For Australians born after June 1964, preservation age is 60 years.
Like most general rules, there are some exceptions to the rule that you must be retired AND reached a certain age, to access super benefits. An unusual exception to the retirement requirement is the special rule for accessing super benefits when an individual turns 60, and that individual terminates an employment arrangement on or after the age of 60. We explain this in more detail later in the article.
Important: Although tax-free super is available on or after the age of 60 for most Australians, the right to access super benefits requires an individual to satisfy a condition of release. If an individual has reached 60 years of age and doesn’t want to terminate employment, or retire, then a transition-to-retirement pension (TRIP, also known as a TRIS) may be an option. Note that if an individual starts a TRIP, he or she can only access up to 10% of his or super benefits via a TRIP (see later in the article for an explanation of TRIPs).
The specific rules that apply to superannuation mean that you cannot access your super benefits until you:
- Reach your preservation AND retire, or
- Satisfy another condition of release.
1. Retire on or after reaching your preservation age
Your preservation age is based on the year that you were born. For anyone born before 1 July 1960, the preservation age is 55, and for anyone born after June 1964, the preservation age is 60 years. If you were born after June 1960, your preservation age is at least 56 years and up to 60 years of age. The preservation age steadily increases until it reaches 60 years of age for those born on or after 1 July 1964 (see table below).
Although you must have reached your preservation age to access your super benefits, merely reaching that specified age, or even reaching the age of 60, is not sufficient to unlock your super benefits.
Your super benefits remain ‘preserved’ until you satisfy a condition of release, which is typically retiring from the workforce.
‘Preserved’ for the purposes of superannuation simply means locked away, rather than protected or guaranteed. For more information on your preservation age, see the table below, and the following SuperGuide articles:
- Accessing super: What is my preservation age?
- If I retire before 60, when can I access my super?
- What is the retirement age in Australia?
- Retirement Age Reckoner: Discover your preservation age and Age Pension age
- Accessing super: Preservation age moves to 59 years
- Age Pension age increasing to 67 years (not 70 years)
- The super challenge: At what age should I retire?
What is the minimum age for accessing super benefits, under normal super rules?
|Date of birth||Your preservation age|
|Before 1 July 1960||55|
|From 1 July 1960 until 30 June 1961||56|
|From 1 July 1961 until 30 June 1962||57|
|From 1 July 1962 until 30 June 1963||58|
|From 1 July 1963 until 30 June 1964||59|
|On or after 1 July 1964||60|
2. Satisfy another condition of release
Satisfying a condition of release means your preserved benefits can become unrestricted or unlocked — that means you can access your super now, provided the rules of your fund also let you cash your super.
The most common conditions of release are:
- Deciding to retire on or after preservation age. You have unlimited access to your super benefits when you retire on or after your preservation age (refer earlier). Depending on your birth date, preservation age can be age 55, 56, 57, 58, 59 or age 60 (see SuperGuide article Accessing super: What is my preservation age?)
- Cessation of employment on or after the age of 60. Special ‘retirement’ rules apply for an individual who terminates an employment arrangement on or after the age of 60. Under sub-regulation 6.01(7) of the Superannuation Industry (Supervision) Regulations, ‘retirement’ also includes where a person is aged 60 or over but under the age of 65, and ceases an employment arrangement, then the person can be considered ‘retired’ for the purposes of accessing preserved super benefits. If an employment arrangement continues however, then turning 60 on its own is not considered a condition of release. For more information on this special rule, see SuperGuide article Does changing to part-time at 60 years, count as ‘retiring’?
- Reaching the age of 65. By turning 65 you can have unlimited access to your super benefits as a lump sum or income stream, and you don’t have to retire if you don’t want to (for more information on this rule, see SuperGuide article Age 65: Accessing your super is a right).
- Starting a transition-to-retirement pension (what I call a TRIP). TRIPs are special superannuation income streams (superannuation pensions) that enable individuals aged 56 to 64 to continue working while drawing down on super benefits. The maximum amount that can be withdrawn each year is 10 per cent of the account balance, and a minimum amount must be withdrawn each year. If you later choose to retire then you can have unlimited access to your super benefits, as a lump sum or as a super pension. For more information on TRIPS, see SuperGuide article TRIPs: 10 important facts about transition-to-retirement pensions.
Note: Although most super benefits are ‘preserved’ until you reach preservation age AND satisfy a condition of release, some Australians who have had superannuation accounts prior to 1999 may also have some ‘unrestricted non-preserved’ benefits which they can access at any time. You can check with your super fund if you believe you may some ‘unrestricted non-preserved’ benefits. For more information on unrestricted non-preserved benefits see SuperGuide article Unrestricted access to super, sometimes.
Remember: You don’t have to withdraw your superannuation benefits by a certain age. You can choose to leave your super account untouched indefinitely (for more information, see SuperGuide article Super for beginners, part 24: Do I have to withdraw my super when I turn 65? If this is what you decide, your super account will remain in accumulation phase. Accumulation phase means that you haven’t started a super pension (also known as an income stream) with your superannuation account. If you make this decision however, your super account’s earnings will continue to be subject to up to 15 per cent tax on fund earnings, because the fund assets remain in accumulation phase. In contrast, earnings on superannuation assets in pension phase are free of earnings tax.
Super alert! Note that since 1 July 2017, there is now a $1.6 million cap on the amount of super you can transfer into retirement phase (for more information on this new cap see SuperGuide article Retirement phase: A super guide to the $1.6 million transfer balance cap).
Accessing super: More conditions of release
You can read about the other conditions of release in the SuperGuide article Accessing super early: 14 legal ways to withdraw your super benefits.
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