You can access your super when you have retired and reached your preservation age, which is anywhere between the age of 58 and 60, depending on your date of birth. Once you reach the age of 65 you receive unrestricted access to your super. In certain circumstances you can access your super benefits earlier than your preservation age, such as in cases of severe financial hardship or permanent disability.
In an accumulation and Transition to Retirement (TTR) account, investment earnings and capital gains are taxed at a maximum rate of 15%. Some capital gains may be taxed at the concessional rate of 10%. In a Retirement account, investment earnings are tax-free.
|
Aged over 60 |
Aged under 60 |
TTR account (pension payments only) |
Tax-free |
Marginal tax rate (plus the Medicare levy), with a 15% offset |
Retirement account |
Tax-free |
Tax-free* |
*Withdrawals from a retirement account are generally tax free, however tax may apply when you withdraw a total amount above the low rate cap (currently $215,000) from super, before you reach the age of 60. The low rate cap is indexed annually.
A Transition to Retirement account allows you to continue to grow your super even after you reach preservation age and are still working. You can only access your super in the form of an income stream, drawing pension payments between 4% and 10% of the 1 July balance each financial year. However, for the 2019-20 and 2020-21 financial years, the minimum pension payment has been reduced to 2% as part of the government’s response to COVID-19.
If you’re between 65 and 74 and still working, the rules around employer-paid super contributions don’t change. Generally speaking, you’re eligible to receive super from your employer if you earn more than $450 in a month and are aged over 18. It doesn’t matter if your job is permanent, or casual.
To be eligible to receive or make voluntary contributions into your super after the age of 67, you need to meet the ‘work test’ or ‘work test exemption’. The work test means you need to have been gainfully employed or self-employed (for gain or reward) for at least 40 hours in a period of not more than 30 consecutive days in the financial year (ending 30 June) before you make the contribution.
Your superannuation doesn’t automatically convert to a pension when you reach retirement age. You generally need to instruct your superannuation provider on what you would like to happen, and you have a range of options for this. Some Australians may choose to take their superannuation savings as a lump cash sum for their bank account, while others transfer their money to retirement products like an account-based pension (also known as an allocated pension) to provide a regular income stream from the money saved in their superannuation.
The maximum amount you can hold in a retirement phase product like an account-based pension is $1.6 million (the $1.6m cap will be indexed to $1.7m on the 1st July 2021). For some, this may mean that you retain much of your savings within the accumulation environment instead.