Starting July 1, 2024, the rules for accessing your superannuation have become simpler. The preservation age for beginning to access your benefits is now effectively age 60. However, until you reach age 65, there may still be restrictions on how you can access your super. You’ll need to be “retired” to make lump sum withdrawals or transfer your super into the more favorable “retirement phase,” where investment earnings within the fund are tax-free. If you’re between 60 and 65 and looking to access your super, it’s a good time to review the rules.

60 is the New Threshold

For anyone born after June 30, 1964, the preservation age is now simply age 60. Previously, individuals could access their superannuation at various ages between 55 and 59. Those lower preservation ages applied to older Australians who have now turned 60 and have already reached their preservation age. Therefore, the rules regarding ages 55 to 59 are no longer relevant.

How Much Super Can I Access?

If you are aged between 60 and 65 and have not yet retired, you can start a Transition to Retirement Income Stream (TRIS). This allows you to receive a regular income of between 4% and 10% of your pension account balance each year. If you wish to access a larger portion of your super or withdraw it as a lump sum, you must meet additional conditions, including:

• Reaching age 65
• Retiring

These conditions are also significant for tax purposes. While TRIS payments to individuals aged 60 or older are generally tax-free—regardless of retirement status—the TRIS itself doesn’t enter the “retirement phase” until one of the conditions (retirement or reaching age 65) is met. This means that while you can start a TRIS, it won’t qualify for the tax exemption on investment earnings from fund assets until you satisfy one of these conditions.

What Does “Retirement” Mean?

To meet the “retirement” condition, you must have ended any arrangement where you were gainfully employed. If you were already 60 when your employment ended, there are no additional requirements, and your future work intentions are not considered. However, if you were under 60 when your employment ended, the trustee of your fund must be satisfied that you intend never to return to gainful employment, whether full-time or part-time. For these purposes, “part-time” work is defined as working at least 10 hours per week. This means you could work less than 10 hours a week and still meet the “retirement” condition.

Planning is Key

Any strategy for withdrawing superannuation should be carefully planned to ensure you understand the implications. There are several factors to consider, including:

• The ongoing requirement to withdraw minimum pension amounts each year if you start a pension
• Implications for your transfer balance account
• Interaction with the Age Pension

Contact our office if you need assistance understanding your eligibility for accessing your super or to discuss your long-term retirement planning.