It only seems like yesterday that you were blowing out the candles on your 18th birthday and now, here you are, having reached your superannuation preservation age! It doesn’t even sound nice, does it? Well, now that we can agree that you’re kinda old; how much super can you access at your preservation age?
How Much Super Can I Access At Preservation Age?
The amount you can access upon reaching your superannuation preservation age will depend on whether you have satisfied the definition of retirement for superannuation purposes.
If you have met the definition of retirement, there is no limit on how much super you can access. You have full, unrestricted access to your super. Furthermore, you are able to access your super as either a lump sum or as an income stream, or both.
If you have not met the definition of retirement, you are only able to access your super in the form of a transition to retirement pension. A transition to retirement income stream allows you to access between 4% and 10% of your balance each financial year – recalculated on 1 July of each year.
What is My Superannuation Preservation Age?
Your superannuation preservation age is based on when you were born, as shown in the table below:
|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|
What is the Definition of Retirement?
The definition of retirement for superannuation purposes is either:
- You have reached your preservation age and an arrangement in which you were gainfully employed has come to an end and you never intend to become gainfully employed (including self-employed), either on a full-time or part-time basis; OR
- After reaching age 60, an arrangement in which you were gainfully employed (including self-employed) came to an end.
Accessing Super at Preservation Age
Up until your preservation age, most of you will have your superannuation within a superannuation accumulation account. However, some of you may, instead, be part of a defined benefit plan, which we’ll get to in a moment.
If you satisfy either of the retirement definitions, above, you are said to be retired and have therefore achieved a full superannuation condition of release, giving you access to all of your superannuation savings in the form of an income stream or lump sum.
If you are over your preservation age, but have not met one of the definitions, you are only able to access your super via a transition to retirement pension.
There is no superannuation preservation age loophole and penalties will apply for accessing super early. In saying that, there are some legal ways that you are able to access your super under certain conditions, which can be found here.
Defined Benefit Pensions and Preservation Age
If you are part of a defined benefit scheme, things can get a little trickier. Because, although you may be eligible to access your super, you really need to consider whether or not you should. And, each defined benefit member is different.
A defined benefit is a formula-based retirement savings plan, determined by your age, number of years contributing to the plan and your salary. Therefore, the timing of accessing your super can be important. It is always best to seek personal advice prior to doing so.
Is My Super Tax-Free at Preservation Age?
Withdrawals from superannuation over age 60 are generally tax free.
If you have reached your preservation age, but are under age 60, some tax may be payable, depending on the tax components within your balance (tax-free/taxable) and the form in which you access your super (lump sum / income stream).
Read more about tax on super withdrawals.
If you are a defined benefit member, transferring your super out of a defined benefit fund, the untaxed portion of your balance will incur tax upon transfer or withdrawal, regardless of your age.
When Can I Access My Super Tax Free?
This video explains, very simply, when you can access your super tax free.
Preservation Age Calculator
The preservation age calculator below is an easy way to figure out your superannuation preservation age.
Can I Access My Super at 60 and Still Work?
Under the superannuation withdrawal rules, you can access your super at age 60 and still work, but your ability to return to work will depend on your situation and which condition of release was used to access your super in the first place.
If you are accessing your super via a transition to retirement pension, then you can most certainly continue to work. In fact, this is what a TTR pension was designed for – transitioning into retirement.
If you are accessing your super after meeting retirement definition number (2), as detailed above, then you are free to work under a different employment agreement, even though you have accessed your super. However, any future contributions to your super account will not be fully accessible until you meet another condition of release.
If you are accessing your super after meeting retirement definition number (1), above, then you are generally only permitted to work on a casual basis – less than 10 hours per week, on any given week. In saying that, if your initial and genuine retirement intentions change, then it is technically possible for you to return to work after having accessed your super.
Ultimately, accessing your super before being eligible can have severe consequences. Even if you are eligible, you should really understand any tax implications of doing so, not to mention whether you should be accessing your super at all. I say this because it may be more beneficial to leave your super where it is for the time being, because once accessed, it can be difficult to recontribute. Superannuation offers significant tax concessions and tax free investment earnings throughout retirement. Do you really want to give that up?
If you’re unsure whether or not you should be accessing your super , our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead-up to retirement. If you’re interested in learning more about our service and cost, click here.
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