Accessing your super at your preservation age

During your working life, your employer will make regular contributions into a superannuation account that's part of a super fund, which then invests these contributions so they can grow. You may also make some contributions to the account if you want to help increase the money you have for retirement. You’re not able to access any of these contributions outside specific circumstances until you reach preservation age. The reason it’s called the preservation age is because your superannuation is locked until you reach this age and meet one condition of release.  

Your preservation age depends on your date of birth:

Source:ATO

To access your superannuation, you need to reach preservation age and fulfil at least one condition of release. Conditions of release include: 

• Retiring
• Starting a transition to retirement whilst still working
• Reaching 65 years old whether you’ve retired or not

On reaching preservation age and meeting a condition of release, the options to access super include: 

• Super income stream
• Transition to a retirement income stream
• Lump sum withdrawal 

You may also combine an income stream and a lump sum payout.

Which preservation age super withdrawal option you choose or have access to depends on several factors. Some of these include:

• Whether you plan to continue working
• How long you want the benefits to last
• The lifestyle you want

How you access your super also has tax and other implications, like affecting your transfer balance cap and your eligibility to receive government support. When planning for your retirement and considering withdrawing your super, it would be wise to seek independent financial advice from an experienced professional. You’ll be able to discuss not only your options but also your plans.

If you opt for an income stream release, you’ll receive a regular payment from your super account. The payment doesn’t have to be made at a set interval or the same amount but must be made at least once a year over an identifiable period. The main types of super income streams include:

Account-based super income streams

A regular and tax-efficient income stream from your super fund. You can choose to convert either the whole amount or a portion of the amount in your super fund into an account-based income stream once you reach preservation age. The minimum withdrawal amount depends on your age and account balance. The income stops after the super balance is exhausted or if you opt for a lump sum withdrawal.

Capped-defined benefit income streams

Can be lifetime pensions irrespective of when they started. They can also include lifetime annuities, life expectancy pensions and annuities or market-linked pensions and annuities that existed before 1 July 2017.

Transition to retirement income streams

This option means you can continue working after reaching preservation age. You can draw down some part of your super balance; however, there are some limitations on the annual amount you can access.

If your super fund allows lump-sum withdrawals, you can draw down all or part of the accumulated balance in a single transaction. You should note that if you choose a lump-sum withdrawal, the funds you withdraw will be treated differently than the funds that remain in the account when it comes to taxation. For example, if you invest the lump sum, any returns on investments have to be declared in your tax returns. The lump sum option is not available if you also choose to make the transition to retirement.

There are certain exceptional circumstances where the ATO will allow you to access your super before you reach the superannuation preservation age. These include:

• COVID-19 early release of superannuation: A temporary measure only available in 2020 during the pandemic.
• Temporary resident departing the country: Available to workers who are citizens of another country but live and work in Australia for a period and accumulate super. If they choose to return to their country of birth, they can access their super.
• Compassionate grounds: An option for those going through different types of hardship. You would need to apply directly with the ATO and your superannuation fund.
• Super balance less than $200
• Several financial hardships: Available if you’re at risk of losing your home or similar. You’ll need to apply and have proof of hardship to be able to access your super.
• Permanent incapacity: Available if you are injured or ill to the point that you can no longer work.
• Terminal medical condition: Available if you become seriously terminally ill and you’re predicted to die within a certain period.
• Voluntary super contributions made by you can be used as part of the First Home Super Saver Scheme to help you pay for a home deposit. 

Withdrawing super at the preservation age is a huge financial decision and has several implications. Consulting an independent financial advisor to help you understand when and how to access your super based on your circumstances is a wise financial decision.