When Can I Access My Superannuation?

Superannuation, Australia’s retirement savings system, provides income support during retirement. Funds contributed to superannuation are generally held within the system and cannot be accessed until specific conditions are met.

Accessing Your Super at Preservation Age

Accessing superannuation typically becomes possible once an individual reaches their “preservation age,” which varies by birth date. For those born before July 1, 1960, the preservation age is 55, gradually increasing to 60 for individuals born on or after July 1, 1964. Reaching preservation age is a prerequisite for accessing super, but it must be combined with meeting an additional condition of release.

Once preservation age is reached, individuals can access their super if they fully retire from gainful employment. Full retirement means stopping work with no intention of returning to the workforce. Alternatively, if an individual reaches age 65, they can access their super even if they continue working.

Another option for those who have reached their preservation age but are not fully retired is a “Transition to Retirement” (TTR) income stream. A TTR allows individuals to access a portion of their super as regular income payments while still working. Payments from a TTR income stream are limited to a maximum of 10% of the account balance each financial year.

Early Access to Super

Accessing superannuation before reaching preservation age is permitted only under specific and limited circumstances. These exceptions address severe financial distress or specific life events.

One condition is severe financial hardship, which applies if an individual cannot meet immediate and reasonable living expenses. To qualify, individuals under preservation age must have received eligible government income support payments for a continuous period of at least 26 weeks. The amount that can be released is generally limited to a lump sum between $1,000 and $10,000 within any 12-month period. For those who have reached their preservation age but are not yet retired, and have received eligible income support for at least 39 weeks, there is no maximum limit on the amount that can be withdrawn.

Compassionate grounds provide another pathway for early access, covering essential expenses that cannot be met by other means. Examples include paying for necessary medical treatment, palliative care, funeral expenses for a dependent, or costs to prevent home foreclosure. It can also cover home or vehicle modifications for a severe disability. Applications for compassionate release are assessed by the Australian Taxation Office (ATO), and the amount released is limited to what is reasonably necessary for the specific expense.

A terminal medical condition allows for full access to superannuation benefits. This condition is met if two medical practitioners, one of whom must be a specialist, certify that the individual has an illness or injury likely to result in death within 24 months. The entire super balance can be accessed as a tax-free lump sum if withdrawn within the 24-month certification period.

Superannuation can also be accessed due to incapacity. Temporary incapacity applies if a physical or mental health condition causes an individual to temporarily stop working or reduce their hours. In such cases, super benefits are paid as an income stream to replace lost wages, ceasing upon full return to work. Permanent incapacity, or Total and Permanent Disability (TPD), allows access if a medical condition makes it unlikely that the individual will ever work again in a job for which they are qualified by education, training, or experience. If permanent incapacity is certified, the entire super balance can be accessed.

Individuals with small superannuation account balances may also be eligible for early release. If an account balance is below a certain threshold, such as $200, and employment has ceased, the funds may be accessible.

Applying for Your Super Release

Initiating the process to release superannuation begins by contacting your super fund. The specific application steps and required documentation vary depending on the reason for access.

For most types of release, such as retirement, incapacity, or terminal medical conditions, the application is handled directly by your super fund. You will need to provide documentation supporting your claim, such as proof of age and retirement declaration, or medical certificates from qualified practitioners.

For early release on grounds of severe financial hardship or compassionate grounds, the application process involves the Australian Taxation Office (ATO). You apply to the ATO through your myGov account, providing digital copies of all necessary evidence. This evidence might include income support statements, bills for immediate living expenses for financial hardship, or invoices and medical reports for compassionate grounds.

Once the ATO approves an application for compassionate grounds or severe financial hardship, they will issue an approval letter. You then present this letter to your super fund to arrange the release of funds. Your super fund will then process the payment.

Taxation of Super Withdrawals

The tax implications of withdrawing superannuation depend on the recipient’s age and the components of their super balance. Superannuation balances are comprised of a tax-free component and a taxable component. The tax-free component includes after-tax contributions, while the taxable component includes employer contributions, salary sacrifice amounts, and investment earnings.

For individuals aged 60 or over, most superannuation withdrawals, whether taken as a lump sum or an income stream, are tax-free from a taxed super fund. Payments from untaxed super funds, often public sector funds, may be subject to tax even at this age.

If a withdrawal occurs between preservation age and age 60, the tax treatment is different. The tax-free component remains untaxed. The taxable component is subject to tax, but a low rate cap applies. Amounts exceeding this cap are taxed at a rate of 15% plus the Medicare levy.

For individuals under preservation age who are eligible for early release, such as due to severe financial hardship or compassionate grounds, lump sum withdrawals from the taxable component are taxed at a rate of up to 22%, including the Medicare levy. The tax-free component remains exempt from tax. The super fund will deduct any applicable tax directly from the payment before it is released.