Super is designed to encourage you to save for your retirement. Money you contribute to super is generally preserved, which means you can’t access it until you meet certain conditions. They’re called conditions of release.
The table below summarises the conditions of release that could apply, depending on your age and personal circumstances.
| Age | Conditions of release |
|---|---|
| 65 or over | You have full access to your super savings, even if you haven’t retired yet. |
| Age 60 to 64 | You can access your super savings without restriction where you satisfy either of the following:
Satisfying either of the above is known as satisfying the ‘retirement condition of release’. Any super you accrue after that date can’t be accessed until you meet a condition of release again. If you’ve reached age 60 but don’t meet either of the requirements above, you can have limited access to your super through a transition to retirement pension account. |
| Under age 60 | To access your super benefits, you need to meet a ‘condition for early access’, such as severe financial hardship or a terminal illness (see details below). |
Conditions for early access
To access your super before turning 60, you’ll need to meet one of the following conditions of release:
There are specific qualifying criteria that must be met in each of these circumstances. If you think you qualify for one of these conditions and would like to access part or all of your super, please talk to a financial adviser.
How can my super be paid out to me?
Once you’ve met a condition of release that provides unrestricted access to your super, such as retirement, you have the option of having it paid as a pension, a lump sum or a combination of both.
There’s no requirement for you to draw down your super once you reach a particular age. You can keep it in your super fund indefinitely. The only time it’s compulsory for a super fund to pay a super benefit is when a member has passed away.
Starting a pension
Once you’re retired, you may be able to use your super benefits to start a pension. There are different types of pensions, but they’re all designed to provide you with a regular income in retirement.
Members of the Macquarie Superannuation Plan can access what is called an account-based pension. Account-based pensions provide you with regular payments from your account and it continues until you close it, or the balance becomes zero.
Account-based pensions require you to take a minimum annual pension amount, which is based on your age and account balance.
If you decide to stop your account-based pension, you can have this amount moved back to an accumulation account or paid to you as a lump sum.
You can read more about account-based pensions in this article.
Withdrawing a lump sum
Once you can access your super, you can take lump sum payments from both accumulation and account-based pension accounts. A lump sum withdrawal means taking out a portion of your super savings all in one go, rather than having it paid to you as regular pension payments.
It’s important to note that lump sums from your account-based pension won’t count towards the minimum annual pension payment mentioned above.
Accessing your super under a ‘transition to retirement’ arrangement
When you’ve reached age 60 but haven’t met one of the other conditions of release (such as retirement or reaching age 65), you may choose to start a transition to retirement (TTR) pension from your super benefits.
TTR pensions are similar to account-based pensions, but certain restrictions apply.
The minimum income that must be drawn down each income year from a TTR pension is the same as for account-based pensions. For a TTR, there is also a maximum payment per year, which is 10 per cent of your account balance
TTR pensions generally don’t allow for the payment of lump sums.
Tax treatment of pension and lump sum payments
If you’re aged 60 or over, super benefits (including lump sums or pension payments) that you receive from your account are tax-free.
Questions and Answers
If I retire or reach age 65, can I keep my benefits in an accumulation account or do I have to start a pension?
You can keep your funds in an accumulation account and draw down on the balance when you want to.
If you’re under 65, satisfy the retirement condition of release and keep your benefits in an accumulation account, any earnings or additional contributions can only be accessed once you subsequently satisfy another condition of release.
If I start an account-based pension, can I stop the pension and move the funds to another super fund?
Yes, you can stop the pension at any time and roll the funds to another super fund. A pro-rated minimum pension payment for the year must be paid before the pension can be stopped.
If I start an account-based pension, can I add additional money to this pension?
No, once a pension starts, you can’t add additional money to that pension.
Can the value of my account go down?
Yes, the value of your account can go both up and down. The value of your account is determined by the outflows (eg. payments out and fees), the inflows (eg. earnings from investments and contributions for accumulation accounts) and changes to the value of the investments in your account, which can be positive or negative.
Is there a maximum super balance I can use to start an account-based pension?
There is a cap (called the transfer balance cap) on the amount of super you can move into an account-based pension. Other types of pensions and income streams that are paid from super can count towards the transfer balance cap.
Each individual has their own transfer balance cap. If you move too much into an income stream that counts towards your transfer balance cap, the excess plus an earnings amount will need to be moved out of one of the relevant income streams. You’ll also need to pay some additional tax on the earnings.
TTR pensions don’t count towards the transfer balance cap until you meet certain conditions of release, including retirement and reaching age 65.
How are the earnings in my account taxed?
Super assets (accumulation and TTR pensions)
The table below generally describes the taxation of income and capital gains on assets held in your super account and transition to retirement pensions, not in the retirement phase.
| Point of tax | Rate of tax |
|---|---|
Investment earnings | 15% |
Realised capital gains: held for 12 months or less held for longer than 12 months |
15% 10%* |
* The net effective tax rate taking into account the 33.33 per cent discount
Account-based pension assets
The table below generally describes the taxation of income and capital gains on assets held in your account-based pension (excluding transition to retirement pensions not in the retirement phase).
| Point of tax | Rate of tax |
|---|---|
Investment earnings | Nil |
Realised capital gains: held for 12 months or less held for longer than 12 months |
Nil Nil |
In relation to an account-based pension, what are the differences in taking a pension payment rather than a lump sum?
An account-based pension allows payments to be classified as either a pension or lump sum. The differences between these two different classifications are shown below.
| Payment type | ||
|---|---|---|
| Pension | Lump sum | |
Regular payments | Yes. You can provide instructions to have your pension payments made fortnightly, monthly, quarterly, half yearly or annually. Ad hoc payments can also be classified as pension payments. | Each lump sum payment must be requested separately. |
Counts towards the minimum pension requirement | Yes | No |
Transfer balance account | No impact | Reduces the amount counting to the transfer balance cap (ie a debit). |
Centrelink age/disability pension (refer to Social security treatment of superannuation and account based pensions for more informatio | Payments don’t count as income for income test purposes. Subsequent assessment will depend on what is done with the payment. Note: Pensions that started before 1 January 2015 may be treated differently. | |
Commonwealth Seniors Health Card | Payments don’t count towards the card’s income test. Instead, the income test is based on Government set deeming rates that are applied to the balance of the account-based pension. Note: Pensions that started before 1 January 2015 may be excluded from the card’s income test. | |
How are super accounts assessed for Centrelink age pension purposes?
Your Centrelink age pension entitlement is assessed against both an assets and income test. For members of a couple, the assessment looks at the combined situation.
The following table shows the assessment of both accumulation and account-based pension accounts under different circumstances of the account holder.
| Age of account holder | Assets test | Income test |
|---|---|---|
Below age 67 (including where your spouse is at least age 67) | Accumulation: Not assessed Account-based pension: Value of account is assessed as an asset. | Accumulation: Not assessed Account-based pension: Income is calculated using an assumed earnings rate - it’s called a deemed rate (note: some Pensions that started before 1 January 2015 may be treated differently). |
Age 67 or over | Accumulation and account-based pension: Value of account is assessed as an asset. | Accumulation and account-based pension: A deemed rate of income is applied (note: some account-based pensions that started before 1 January 2015 may be treated differently). |
Note: Pension accounts in the table above include TTRs.
For further information, please refer to Social security treatment of super and account based pensions
How are super accounts assessed for Commonwealth Senior Health Card (CSHC) purposes?
Eligibility for the CSHC is based on an income test.
Account-based pensions that started on or after 1 January 2015 will be included in the income test. The amount of income assessed is determined by a rate of deeming determined by law.
Account-based pensions started before 1 January 2015 may be exempt from the income test.
Need help?
Accessing your super is a big financial decision. We suggest talking with a qualified financial adviser, who can help you decide when and how you should access your super, based on your individual circumstances.
