Accessing superannuation requires you to meet a superannuation condition of release.
Generally, this first opportunity that you have to meet a condition of release is by reaching your superannuation preservation age.
The superannuation preservation age for people born between 1 July 1961 and 30 June 1962 is 57.
This signifies the first time that individuals with birth dates within this period are able to access their superannuation savings.
However, there are certain superannuation withdrawal rules in relation to accessibility and taxation that needs to be considered, despite having reached age 57.
This article explains the rules around accessing superannuation at your preservation age.
Click here for superannuation rules for people aged over 65.
Superannuation Preservation Age
The table below details your superannuation preservation age based on when you were born.
| Date of Birth | Preservation Age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| After 30 June 1964 | 60 |
Accessing Super At 57
As mentioned, you are able to access your superannuation at age 57 if you were born between 1 July 1961 and 30 June 1962. You are able to access your superannuation in the form of a lump sum or as a superannuation pension income stream. However, your work and employment status may limit your ability to access your superannuation.
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Can I Access My Super At 57 And Still Work?
Provided you have met your superannuation preservation age, you are able to access your superannuation and continue to work. There are two ways that this can occur.
The first and most common way of accessing your superannuation after reaching your preservation age and still working is via a Transition to Retirement (TTR) Pension. A Transition to Retirement Pension is a Non-Commutable Income Stream that can be commenced with some or all of your superannuation accumulation savings (subject to the Transfer Balance Cap from 1 July 2017).
A Transition to Retirement Pension requires you to draw an income of between 4% and 10% of your pension account balance as at 1 July of each year (pro-rata if the pension was commenced part way through a financial year).
Lump sum commutation withdrawals are unable to be made from a Transition to Retirement Pension.
There is no limit on how much you earn or how many hours you work if you have a Transition to Retirement Pension.
Read this article about accessing your super at 60 and still working.
Can I Cash In My Super and Still Work?
A Transition to Retirement Pension provides you with limited access to your superannuation savings while you are still working and does not allow you to ‘cash in’ all of your superannuation savings.
However, the second, and less utilised way of accessing your superannuation after reaching your superannuation preservation age will give you access to all of your superannuation savings, which can be accessed as a lump sum or pension income stream (standard account based pension – with no upper income threshold), or a combination of both, without breaching any superannuation withdrawal rules.
It requires you to meet the superannuation definition of ‘retirement’. There are several definitions of ‘retirement’ for superannuation accessibility purposes, but one such definition is, as follows:
In the case of a person who has reached a preservation age that is under age 60, the retirement of that person is taken to occur if an arrangement under which the member was gainfully employed has come to an end; and the trustee of their superannuation fund is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis.
Click here to access my Superannuation Preservation Age Calculator to calculate your specific preservation age.
What this means is that, if you are working and then decide to retire permanently with no intention of returning to full-time or part-time work, you will have full and unlimited access to the superannuation savings that you have accumulated up until that point.
The important word within the definition is ‘intention’.
At that time when you ceased work permanently, your intention to retire may have been genuine, but that does not mean that you can’t return to part-time or full-time work at some point in the future.
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It is very important, however, that this condition of release is not abused.
All of your personal and employment circumstances at the time of your intended permanent retirement must be consistent with your intentions to permanently retire (e.g. ceasing an employment arrangement on Friday with the intention of never returning to work, but then starting a new job two weeks later would not be looked upon favourably by the Commissioner of Taxation and would likely be in breach of the superannuation conditions of release provisions).
Also, if you do return to work, any ‘new’ contributions made to superannuation in respect of your return to the workforce will be inaccessible. Only your superannuation balance at the time you initially retired will be accessible. You will need to meet another super condition of release to access to additional contributions.
So, technically, you are not able to cash in your super and still work; however it appears you can cease work with the intention of never returning, cash in your super, and then return to work.
Whatever the case, you should always obtain personal financial advice from a licensed financial planner and/or speak with your superannuation provider regarding your circumstances, prior to accessing your superannuation.
Accessing Super at 57: Tax on Income Streams
Whether you commence a TTR Pension while still working after reaching your Preservation Age, or commence an ordinary account based pension by permanently retiring after your Preservation Age, the taxation of your income stream will be the same.
Your income stream is made up of two main static components:- the ‘Tax-Free’ Component and the ‘Taxable’ Component. The Taxable Component is then further broken down into the Taxable (taxed) Component and Taxable (untaxed) Component.
The taxable/tax-free proportion of an income stream is unique to each individual income stream, based on the components at the time the income stream was commenced. You should contact your superannuation provider to ask for the taxable/tax free make-up of your superannuation balance.
Here’s how each component is taxed when received as an income stream:
| Component | Tax |
|---|---|
| Tax-Free | 0% – not assessed for tax |
| Taxable (taxed) | Taxed at MTR minus 15% offset |
| Taxable (untaxed) | Taxed at MTR |
All income payments must be made proportionately from each component. Click here to read more about the taxation of the taxable component.
For example, if your superannuation pension was made up of 30% tax free component and 70% taxable (taxed) component and your monthly payment was $5,000, then $1,500 (30% x $5,000) would be received completely tax free and the remaining $3,500 would be taxed at your marginal tax rate. However, a 15% offset of $525 on the ‘taxable’ component (15% x $3,500) of the payment would be received to reduce your tax.
Accessing Super at 57: Tax on Lump Sums
If you decide to make a lump sum withdrawal from your superannuation accumulation account (i.e. not a superannuation income stream), the taxation of the withdrawal will again depend on the tax components of your specific balance. All lump sum withdrawals must be made proportionately from each component.
Here’s how each component is taxed when received as a lump sum:
| Component | Tax |
|---|---|
| Tax-Free | 0% – not assessed for tax |
| Taxable (taxed) | first $210 000* = 0% |
| Taxable (taxed) | balance over $210 000 = 15% |
| Taxable (untaxed) | first $210 000* = 15% |
| Taxable (untaxed) | amount from $210 000 to $1.515M* = 30% |
| Taxable (untaxed) | amount over $1.515M* = 45% |
*This amount is a lifetime cap and is indexed
Note: Medicare Levy applies to all tax rates above 0%
