Wondering what happens to your super when you stop working?

Superannuation is a vehicle designed to help you save towards retirement and cover expenses when you decide to stop working.

You might associate superannuation with the place that your employer makes compulsory superannuation guarantee (SG) contributions to, as shown on your payslip.

However, it is also possible to make voluntary contributions, such as non-concessional contributions, salary sacrifice contributions or personal concessional contributions into super.

In a nutshell, the incentive of putting money into superannuation is the tax concessions on certain contributions and tax savings on earnings, compared to investing in your own name.

The downside is that you can’t access your super until you reach a certain age.

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What Happens To My Super If I Stop Working?

A superannuation account consists of two phases: Accumulation Phase and Pension Phase.

Generally, while you are working, all of your superannuation will be in accumulation phase.

When you stop working, you can then convert your superannuation to pension phase and draw an income to assist in covering retirement expenses, provided you have reached your superannuation preservation age.

Accumulation phase is an account that is able to accept any type of contribution.

Your account balance is invested in the way that you have decided to invest it.

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What happens to your super if you stop working is that the balance continues to remain invested.

The only difference, presumably, is that no employer contributions will be made to the account.

Also, if you have salary continuance insurance cover within your account, you may no longer be covered for this, as it generally requires you to be working to be eligible for a benefit.

If you are self-employed, there will be no change to your super.

Whether you are employed, self-employed, unemployed or not working, there is nothing stopping you from making voluntary contributions into your superannuation account.

The only restrictions on super contributions are work test requirements when over age 65, age limits on certain contributions and the contribution caps.

I have shown a few superannuation examples here of the different types of contributions.

You are not required to convert your accumulation account to pension phase once you stop working. Your account balance can remain in accumulation phase indefinitely.

You can even make lump sum withdrawals from your accumulation account, provided you meet certain conditions.

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What Happens To My Super If I Am Unemployed?

Again, there will be no change to your super if you are unemployed, apart from the fact that you won’t have an employer making contributions into your account; and any salary continuance cover may no longer be valid.

You will generally not lose any superannuation as a result of being unemployed.

Unemployed Super Contributions

If you are unemployed, you will not be receiving any employer SGC; however, you do have the ability to make voluntary non-concessional or concessional contributions to your account.

You should always consider the contribution caps prior to making any contributions and determine if there are any contribution restrictions due to your age.

Defined Benefit Scheme (Not Working/Unemployed)

If you have a defined benefit superannuation scheme, whereby your benefit is calculated on a multiple of your salary, years of service, etc. then your final benefit may be impacted by the fact that you are not working.

What To Do With Superannuation When Not Working


Intending On Returning To Work

If you have temporarily stopped working and plan on returning to work, you may consider using this an opportunity to review your superannuation account by comparing it with other superannuation funds available and/or the investments that your balance is invested in.

Your comparison of superannuation funds might include a review of fees, available investment options and features.

You might also review any life insurances held within your account and your superannuation death benefit nominations.

There is nothing else that you really need to do with your superannuation when not working. Your balance will continue to be invested.

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If you have spare income or savings, you may consider making additional contributions to super to reduce the risk of fees and insurance premiums eroding your super balance.

If you do return to work, you will generally have the ability to nominate your existing superannuation fund as the fund that you would like your new employer to make employer SG contributions to.

If you have reached your superannuation preservation age, you may consider using some or all of your super accumulation balance to start a transition to retirement (TTR) income stream.

Not Intending On Returning To Work

If you do not intend on returning to work and have reached your superannuation preservation age, you might consider starting an account based pension.

Alternatively, you can simply leave your superannuation savings in accumulation phase.

The main difference between accumulation phase and pension phase is the difference in tax rates applied to investment earnings and the requirement to receive minimum pension income payments from a pension account.

Super Eaten By Fees

If you are concerned that your super will be eaten by fees, you should ensure that you understand the fees associated with your superannuation fund.

Fees are an inevitable part of holding a superannuation account. However, fees can differ significantly between superannuation providers.

To find out the fees charged by your superannuation fund and others, you should read the super fund’s Product Disclosure Statement, which can usually be obtained from their website, or by contacting the superannuation fund directly.

Chris Strano

Hi, I hope you enjoyed reading this article. If you want my team and I to help with your retirement planning, click here. If you prefer a DIY approach, then check out the SuperGuy HUB. Thanks for stopping by - Chris.

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