Superannuation: conditions of release

A core purpose of super is to provide support (benefits) in retirement—accessing and using the wealth we accumulated while working to generate income to support us in our retirement years. And, death aside, the main conditions of release (ie situations in which we can access super) broadly operate in conjunction with this.

For example, these main conditions of release generally centre on retiring from work and/or attaining certain ‘retirement’ ages. However, there are other conditions of release that allow access to occur earlier than this.

Below is a brief and general overview of the conditions of release.

Conditions of release

Overview

In the super environment, there is a term called ‘Benefit Payment Standards’. This term encompasses the conditions of release in which you are eligible to access your super and the cashing restrictions that can apply, for example, whether your super benefits can be paid as a lump sum, income stream or both.

Main conditions of release

Death.

  • There are no cashing restrictions. Super benefits can be paid as a lump sum or income stream to certain eligible dependants or your estate. Please note: Proof of your passing must be provided to your super trustee.

Attainment of age 65 (regardless of retirement status).

  • There are no cashing restrictions. Super benefits can be paid as a lump sum, income stream or both.

Permanent retirement after attainment of preservation age.

  • There are no cashing restrictions. Super benefits can be paid as a lump sum, income stream or both. Please note: You must cease gainful employment, and your super trustee must be satisfied that you don’t intend to be gainfully employed (ie on a part- or full-time basis) ever again.

Termination of a gainful employment arrangement after attainment of age 60.

  • There are no cashing restrictions. Super benefits accrued up until the date of termination can be paid as a lump sum, income stream, or both. However, new contributions or growth on your account balance after this date will be preserved until another condition of release is met.

Attainment of preservation age (and not retired).

  • There are cashing restrictions. You could commence a ‘transition to retirement’ or non-commutable income stream, where your maximum income each year can’t exceed 10% of your account balance, and you can’t withdraw a lump sum—these cashing restrictions apply until another condition of release is met that has no cashing restrictions.

Other conditions of release

Permanent incapacity.

  • There are no cashing restrictions. Super benefits can be paid as a lump sum, income stream, or both. Please note: Your super trustee must be satisfied that you are unlikely, because of ill-health (eg physical or mental), to engage in gainful employment for which you are reasonably qualified by education, training, or experience.

Temporary incapacity.

  • There are cashing restrictions. Super benefits can be accessed as a non-commutable income stream to continue your pre-temporary incapacity gain or reward for the period of incapacity. Please note: Your super trustee must be satisfied that your ill-health (eg physical or mental) caused you to cease to be gainfully employed, but doesn’t constitute ‘permanent incapacity’.

Severe financial hardship (A – after attaining preservation age).

  • There are no cashing restrictions. Please note: Your super trustee must be satisfied that you aren’t gainfully employed on date of application (ie you aren’t working more than 10 hours a week at time of request), and have received relevant Commonwealth income support payments for a total of 39 weeks after attaining preservation age.

Severe financial hardship (B – not dependent on preservation age).

  • There are cashing restrictions. In each 12 month period (beginning on the date of first payment), a single lump sum not less than $1,000 (except if the amount of your preserved benefits and restricted non-preserved benefits is less than that amount) and not more than $10,000. Please note: Your super trustee must be satisfied that you can’t meet reasonable and immediate family living expenses, and have received relevant Commonwealth income support payments for the previous 26 weeks.

Compassionate grounds.

  • There are cashing restrictions. Super benefits can be paid as a single lump sum not exceeding an amount determined by the ATO. Please note: You must apply to the ATO for payment and satisfy release based on specific grounds.

Terminal medical condition.

Lost member benefits under $200.

  • There are no cashing restrictions. Please note: You are generally considered a lost member if you are uncontactable, are an inactive member, or joined the super fund as a lost member.

The First Home Super Saver Scheme (FHSSS).

  • There are cashing restrictions. For more details on this specific condition of release (eg eligibility and payment of super benefits), please click here.

Permanent departure from Australia by certain temporary residents.

  • There are no cashing restrictions. Super benefits must be paid in full (and special tax arrangements apply). Please note: You will generally need to have lodged a Certificate of Immigration Status and/or request to cancel a Temporary Resident Visa,  however if your super balance is less than $5,000, you may instead provide a copy of your temporary resident visa and passport showing departure to your super trustee.

Termination of gainful employment with employer-sponsor of a super fund (and balance under $200).

  • There are no cashing restrictions.