Cracking open your super nest egg

You may be able to get your hands on your hard-earned super money sooner than you think.

To give your super money time to grow, the funds are ‘preserved’ throughout your working life. This means access is generally restricted until you meet what is known as a ‘condition of release’.

The most common condition of release (not surprisingly!) is retirement. You can be ‘retired’ and gain unlimited access to your super by meeting one of two definitions:

  1. You’re aged 55 or older, have left an employment arrangement at some point in your career and you don’t intend to work more than 10 hours a week in the future; or
  2. You cease a current employment arrangement after the age of 60 (irrespective of your future work intentions).

Alternatively, you can get access to your super simply by reaching age 65.

Accessing super in practice

During her career Leah, 62, has been a secretary, librarian and now counsellor. She left her secretarial and librarian jobs when she had children in her thirties, because at that time her employers didn’t offer flexible work arrangements.

Now with an elderly mother to care for, Leah decides to reduce her hours of work as a counsellor from 40 to 8 hours per week.

Leah hasn’t ceased an employment arrangement after turning 60 and therefore hasn’t met the second definition of the retirement condition of release. (If she had instead resigned from her current job and got a new one, regardless of the hours of work, she would qualify under this definition.)

However, she has met the first definition of the retirement condition of release because she left a position of employment (ie her secretarial and librarian work), she’s over 55, and she doesn’t work (and has no intention of working) more than 10 hours a week in the future. Leah could, therefore, choose to withdraw all of her super.

Accessing super before retirement

If you’re 55 or older (even if you’re still working), you can still access some of your super as regular income payments.

A ‘transition to retirement’ strategy allows people who have reached their superannuation preservation age (currently 55) to access benefits in the form of a restricted income stream (ie lump sum withdrawals are not permitted).

The strategy is particularly beneficial once you reach age 60, as at that point the income payments you receive from your super are tax-free.

Preservation ages are changing

Currently, the preservation age is 55 but this will increase in the future, rising to age 60 for those born after 30 June 1964.

Tags: Retirement