When Is Superannuation Payable? Conditions for Access
Understand the conditions and timelines for accessing your superannuation. Get clear insights on when you can receive your funds.
Superannuation in Australia functions as a compulsory retirement savings system, where employers contribute a portion of an employee’s salary into a superannuation fund. These accumulated savings are generally preserved until an individual meets specific conditions outlined by Australian law. This article explains the various circumstances under which an individual can access their superannuation savings.
General Superannuation Access
Most individuals access their superannuation upon reaching a specific age, known as their preservation age, and satisfying certain retirement conditions. The preservation age depends on an individual’s date of birth, ranging from 55 to 60 years. For example, those born before July 1, 1960, have a preservation age of 55, while it reaches 60 for those born on or after July 1, 1964.
Once an individual reaches their preservation age, they can access their superannuation if they declare they have retired from gainful employment and have no intention to return to work. “Gainful employment” means working for payment or financial reward. A formal retirement declaration confirms the individual has ceased working permanently or for a significant period.
Alternatively, superannuation can be accessed once an individual reaches 65 years of age, irrespective of their employment status. At this age, there is no requirement to be retired or to declare an intention not to work again.
Specific Conditions for Early Access
In limited circumstances, individuals may access superannuation before their preservation age. One condition is a terminal medical condition, where two medical practitioners, including at least one specialist, certify the illness is likely to result in death within 24 months. This allows a full release of benefits.
Individuals experiencing temporary incapacity due to physical or mental ill-health, preventing them from working, may access superannuation as an income stream. This benefit replaces lost income while the individual is unable to perform usual duties. If the incapacity is permanent, meaning the individual is unlikely to work again in a job for which they are reasonably qualified, they may be eligible for a permanent incapacity release. This requires medical evidence confirming the long-term nature of the disability.
Severe financial hardship can also provide grounds for early access, typically requiring an individual to have received eligible government income support payments for a continuous period, such as 26 weeks. The individual must also demonstrate an inability to meet reasonable and immediate family living expenses. Compassionate grounds allow early access in specific situations, including paying for medical treatment, palliative care, funeral expenses, or preventing a mortgage foreclosure or home repossession. Each compassionate ground has specific criteria and limits on the amount that can be released.
The First Home Super Saver Scheme (FHSSS) offers another avenue for early access, enabling eligible first-home buyers to withdraw voluntary superannuation contributions to help purchase their first home. This scheme allows the release of eligible non-concessional and concessional contributions, along with associated earnings, for a home deposit. Strict eligibility criteria and limits apply to amounts withdrawn under the FHSSS.
Applying for Superannuation Payments
Once an individual meets a specified condition for accessing superannuation, they contact their superannuation fund to initiate payment. Funds require specific documentation to verify eligibility and process the release of funds. This typically includes proof of identity, such as a driver’s license or passport.
The documentation required depends on the access condition claimed. For example, a retirement declaration is needed for preservation age retirement access. Early release on medical grounds necessitates medical certificates, while severe financial hardship claims require evidence of government income support payments and a statement of financial position. For the First Home Super Saver Scheme, a determination letter from the Australian Taxation Office (ATO) is required.
Individuals generally have two main options for receiving superannuation: a lump sum payment or an income stream (pension or annuity). A lump sum involves receiving the entire accessible amount as a single payment. An income stream provides regular payments over a period. Funds typically process requests within a few days to several weeks, depending on claim complexity and documentation completeness. Tax implications may apply to withdrawals, depending on age and payment type.