When Can You Access Super? Conditions of Release Explained

Superannuation, often called “super,” is Australia’s compulsory retirement savings system. Employers contribute a percentage of an employee’s wages into a super fund. While superannuation is primarily for retirement, specific conditions, known as “conditions of release,” must be met before these funds can be accessed.

Understanding Preservation Age and Retirement

The most common way to access superannuation is by reaching a specific age and meeting a condition of release. This age, known as “preservation age,” varies by birth date. For those born before July 1, 1960, the preservation age is 55, increasing to 60 for those born after June 30, 1964.

Once an individual reaches their preservation age, they can access their super if they also meet the definition of retirement. This means ceasing gainful employment and declaring no intention to become gainfully employed again. If an individual is 60 or older and ceases an employment arrangement, they can access their super from that employment, even if they intend to work again.

Alternatively, individuals aged 65 or over can access their super regardless of employment status, even if still working. Once these conditions are met, individuals can access their super as a lump sum, an income stream (pension), or a combination.

Accessing Super Early

In limited circumstances, individuals may access their superannuation before reaching their preservation age. These early release conditions require meeting specific criteria.

One pathway is severe financial hardship, which requires an individual to be receiving government income support payments for a continuous period of at least 26 weeks and demonstrate inability to meet reasonable and immediate family living expenses. The minimum amount that can be paid under this condition is $1,000, with a maximum of $10,000, and only one such withdrawal is permitted in any 12-month period.

Another option is accessing super on compassionate grounds. These include:

• Paying for medical treatment or transport for oneself or a dependant
• Palliative care
• Modifications to a home or vehicle for severe disability
• Funeral expenses for a dependant
• Preventing foreclosure or forced sale of a principal home

The expense must be unpaid, and the applicant must be unable to afford it.

A terminal medical condition also allows for early super access. Two registered medical practitioners must certify that the individual has an illness or injury likely to result in death within 24 months of the certification date. At least one of these practitioners must be a specialist in the area of the illness or injury. Any lump sum payment received under this condition is tax-free if withdrawn within 24 months of certification.

Early access is also possible due to temporary or permanent incapacity. Temporary incapacity applies if ill-health temporarily prevents an individual from working at all or from working their usual hours. Permanent incapacity requires certification from two medical practitioners that health issues are likely to prevent the individual from ever again engaging in gainful employment for which they are reasonably qualified.

Accessing Specific Super Balances

Beyond the primary retirement and early access conditions, other specific scenarios allow superannuation withdrawals. These address particular circumstances.

One such scenario involves small super balances. If an individual terminates employment and their super account balance with that employer is less than $200, they may be able to access those funds. This condition helps in consolidating small, inactive accounts.

Temporary residents leaving Australia permanently may also access their super through the Departing Australia Superannuation Payment (DASP). To qualify, the individual must have accumulated super while working in Australia on an eligible temporary resident visa, their visa must have ceased to be in effect (expired or cancelled), and they must have left Australia without holding any other active Australian visa. Australian and New Zealand citizens or permanent residents are not eligible for DASP.

Applying to Access Your Super

Once an individual determines they meet a condition of release, the process of applying to access superannuation begins. This requires careful attention and communication with the super fund.

The first step involves identifying the super fund holding the individual’s savings. After identifying the relevant fund, the individual must contact them directly to request application forms and understand their process. Super funds will provide detailed instructions and requirements.

Gathering all required supporting documentation is essential. This includes identity documents and evidence for the condition of release, such as medical certificates for incapacity claims or proof of government income support for financial hardship. After completing the application forms and compiling the documentation, these must be submitted to the super fund.

Processing times can vary, but super funds review applications to ensure all legislative requirements are met. They may request additional information if the initial submission is incomplete or unclear. Following the review, the fund will notify the applicant of the outcome, and if approved, arrange for the payment of benefits.

Tax on Superannuation Withdrawals

The tax treatment of superannuation withdrawals depends on several factors. These include the individual’s age, whether the withdrawal is a lump sum or an income stream, and the components of the super balance.

For individuals aged 60 or over, lump sum withdrawals from a taxed super fund are tax-free. If super is accessed as an income stream (pension) after age 60, these payments are also tax-free.

For those under 60, lump sum withdrawals are taxed on the taxable component, with a maximum rate of 22% (including Medicare levy). If an income stream is received by someone under 60, the taxable component is included in their assessable income, though tax offsets may apply.

Early access withdrawals also have specific tax rules. Funds released due to severe financial hardship or on compassionate grounds, if the individual is under preservation age, are taxed as a lump sum. However, super benefits paid due to a terminal medical condition are tax-free, regardless of age, if withdrawn within 24 months of certification.