Access Your Super
How can I access my super
Generally, you can take your superannuation once you have:
- reached age 65, or
- reached your preservation age and retired from the workforce.
Your preservation age is the minimum age you can draw on your super and varies depending on when you were born.
Retiring after 60
Since July 2007, taxation on superannuation benefits has been simplified for those retiring after age 60. It can now be summarised simply in two words: tax-free.
It no longer matters when you started your super, the types of contributions made and how you make the withdrawal. If your super comes from a taxed super fund – which most of us have – your benefit will be paid to you tax-free. If your super comes from an untaxed fund, such as many public sector funds, you may still be subject to income tax, but at a lower rate than if you were under age 60.
More benefits
The benefits of delaying your retirement until you reach age 60 continue:
- Your super income doesn’t count towards your taxable income.
- If you keep your super money in a pension or annuity, the earnings and withdrawals are tax-free.
Note: If you retire, you can leave your money in your super plan indefinitely. This is called the accumulation phase. Money keeps earning returns and the earnings are taxed at 15%. It can make financial sense to move this money into an annuity or pension rather than leave it in your super fund.
Is 60 the new 65?
Currently, age 65 is the qualifying age for the aged pension for Australian men and age 64.5 for Australian women. This will increase for both genders from 1 July 2017 from 65 to 65.5 years, then rise by six months every two years, reaching 67 by 1 July 2023. It depends on when you were born.
What’s your qualifying aged pension date?
This is worth considering when setting your retirement date. While your super is tax-free after age 60, you will have to wait until your qualifying age before supplementing this income with an aged pension.
Compassionate grounds
While you generally cannot take your super until retirement, there are some specific circumstances where the law allows you to draw on your super early.
These conditions can be summarised as:
- Compassionate grounds
- Terminal medical condition
- Permanent or temporary incapacity
- Severe financial hardship.
Taxation
Each case has its own tax treatment:
- In cases of terminal illness, no tax is charged.
- If you become permanently incapacitated, and money is taken as a lump sum, the tax-free component is increased to reflect the period you would have been gainfully employed.
- If you become permanent or temporary incapacitated or have applied on grounds of financial hardship, and are drawing on your benefit through an income stream, you will be taxed as if aged 55 to 59. This means money drawn from your taxable component is tax-free and money drawn from your taxable component will be taxed at your marginal tax rate, less any offsets you may be entitled to.
- In most compassionate ground cases, super released early is taxed at between 20% and 25% depending on whether it comes from the taxed or untaxed component.
- Each has its own conditions of release and procedures.
Compassionate grounds
Preserved superannuation benefits may be released on compassionate grounds where a person does not have the financial capacity to meet certain expenses You will need to talk to your fund first and clarify if they can release the funds under their trust deed. From 1 November 2011, the Department of Human Services (DHS) – Medicare Australia takes over administration of the Early Release of Superannuation Benefits on Specified Compassionate Grounds from the Australian Prudential Regulation Authority (APRA).
Compassionate grounds include:
- medical or dental treatment for serious conditions where treatment is not available through the public health care system or covered by workers compensation or any applicable private health insurance
- transport for medical treatment of serious conditions
- modifications to your home or transport because of a severe disability suffered by you or a dependant
- palliative care expenses for yourself or a dependant
- funeral assistance, or
- mortgage assistance to prevent the forced sale of your residential home.
Please note that payments against vehicles, utilities, credit cards or other personal debts are not specified compassionate grounds unless they relate to one of the above situations.
Terminal medical condition
- You will need to talk to your super fund (and no external approvals are required).
- You will need to provide your fund with two medical certificates from registered medical practitioners, with at least one specialising in the relevant field. Two can sign one certificate or you can provide two. It needs to be valid for the next 12 months.
- Payment is made as a lump sum.
- There are no limits on how much can be withdrawn.
- Money forwarded under this condition is tax-free.
- You will need to consult Centrelink to ensure this money does not affect other social security payments.
Do this before applying to your existing fund.
If you move your super money into another fund under this terminal illness condition of release, it will be treated as a personal contribution to the new fund, not as a rollover. It will count towards your non-concessional contributions cap. If a tax deduction is able to be claimed, it will count towards your concessional contributions cap.
Permanent or temporary incapacity
- You will need to talk to your super fund (and no external approvals are required).
If you are permanently incapacitated:
- You will need to provide your fund with two medical certificates from registered medical practitioners, with at least one specialising in the relevant field.
- They will need to certify you are unlikely to ever engage in gainful employment for the type which you are reasonably qualified by education, training or experience.
- You may be eligible for the whole amount that may be paid as a lump sum or only as an income stream. If you are temporarily incapacitated:
- The benefit can only be paid as an income stream.
- You will not be eligible for the full amount if receiving sickness benefits. The benefit may be reduced by sickness benefits and workers compensation.
Severe financial hardship
- You will need to talk to your super fund (and no external approvals are required.)
- You have received Commonwealth income support payments continuously for 26 weeks. (You will need a letter confirming this.)
- You will need to satisfy your super fund you are unable to meet reasonable and immediate living expenses.
- You are only able to receive one payment in any consecutive 12 month period.
- The minimum is $1,000 or balance if you have less than $1,000.
- Maximum payment is $10,000 gross (ie before tax).
- The whole amount may be released to those over 55 years and 39 weeks and have received Commonwealth support for a cumulative 39 weeks after age 55 and not be gainfully employed on a full or part-time basis at the time you apply.
Temporary residents
Some temporary residents (on specific visas) departing Australia can apply for the early release of their superannuation (excludes New Zealand citizens).
The main point you need to be aware of is that you should apply within six months of your departure or your temporary visa expiring, whichever is the earliest. Once this time has passed, your fund is required to transfer the money to the Australian Taxation office (ATO) where it doesn’t earn any interest.
The good news is that you can now apply to take your super home online.
Apply here
The application for your benefit payout, called a Departing Australian Superannuation Payment (DASP) needs to be made through the ATO or you can download a copy.
Once your form is complete, the ATO will contact your super fund, and they can then release the benefit to you (after deducting withholding tax).
Tax rates
The withholding tax rates for DASPs are:
- 0% for the tax-free component
- 35% for a taxed element of a taxable component.
- 45% for an untaxed element of a taxable component (public sector funds).
- The taxable component of your super refers to the taxable portion of your super payout. If you are under age 60 or receiving an untaxed benefit (which usually comes from a public sector fund) this will generally be the whole benefit
What you need to know
- These conditions apply to people entering Australia on a temporary working visa (456 and 457 visas).
- This doesn’t apply to New Zealand citizens, as they are allowed to return and retire in Australia.
- This does not apply to people entering Australia on a retirement visa (sub-class 405 and 410).
- You can enter your personal details online before leaving Australia and then update them once you have departed.
Super and divorce
Divorce and dividing assets can be a difficult time. It can also be the beginning of a new stage of life with more financial independence.
Fortunately, dividing superannuation has become easier. Super splitting laws treat super as a different type of property which allows separating couples to value their super and split payments between them.
One important development is that the law includes de facto couples (including same sex couples) in this regime, except for those residing in in Western Australia.
What are the laws about?
Separating couples can make a superannuation agreement about how to split the super and any payments. It is similar to the general financial agreement made about other property.
The approach to take depends on how much agreement there is between the parties and how much information is required. Couples may:
- enter into a formal agreement to split the member-spouse’s super. A formal written agreement involves certificates confirming both parties have had formal legal advice. Once both agree there is no need to go to court. This becomes a binding document which the super fund trustee must act on, or
- seek consent orders to split the super, or
- seek a court order to split the super.
Getting a valuation
While there is no legal requirement to obtain a valuation of the fund, it is sensible to do so, particularly in the case of defined benefit funds. The court is required to value the super interest of both parties if a court order is sought.
What the agreement must say
The laws state the superannuation agreement must specify:
- the base amount
- the method for calculating the base amount, and
- a percentage that is to apply to all splittable payments made in respect of the base amount.
Generally, only super accrued up to the time of separation is split, and percentage shares used for super still in its growth phase (as opposed to the payment phase where amounts can be specified.)
Where an agreement specifies a dollar amount, the non-working spouse is generally entitled to that amount adjusted for the performance of the fund.
Who do the laws apply to?
Married, or formerly married, couples who had not finalised settlement of their property arrangements by a court order under section 79 of the Family Law Act or an agreement approved by a court under section 87 of that Act, before the laws commenced on 28 December 2002, and De facto couples, in most states and territories, whose relationship broke down on or after 1 March 2009 (and South Australian de facto couples, where their relationship broke down on or after 1 July 2010).
Points to note
- You cannot access the super until you reach a condition of release, such as retirement.
- The non-member spouse can specify where they would like their entitlement to be rolled over to.
- You will need legal advice and a legally binding agreement for the trustee to be bound by its terms.
More information
