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Over three decades ago, Australia’s then-Prime Minister, Paul Keating, heralded the introduction of the compulsory superannuation scheme by telling parliament that “for the first time in our history…ordinary Australians will be able to build a decent nest egg for their retirement”.
Just like Keating highlighted then, the major purpose of superannuation over the ensuing 30 years has been to support Australians in their retirement. The super guarantee is designed to accumulate in two ways: through investments that compound over time, and by ensuring that investment remains untouched until retirement to give it a proper chance to accrue.
As a result, it should come as no surprise that there are only very specific circumstances in which you will be able to access your superannuation before you finish your working life.
Related: How do I find my Unique Superannuation Identifier?
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When can you Withdraw your Super?
While there are some conditions under which you access your superannuation early, for most Australians you will only be able to access your superannuation once you meet a condition of release, which is when:
- You reach your preservation age and retire; or
- You reach your preservation age and start a transition to retirement pension; or
- You turn 65.
Your preservation age depends on when you were born, according to the below table.
Source: ATO
Most importantly, the preservation age is not the same as the age at which you can access the aged pension (which is 66 and 6 months old until 1 July 2023 when it will be 67 years). So if you do choose to retire at 60, you need to be able to self-fund that retirement until at least 67.
The age at which you can access the aged pension has risen in response to people living longer these days. Successive federal governments have also become increasingly concerned about the cost of funding the aged pension among a growing cohort of elderly Australians.
Early Release of Super
There are some extenuating circumstances under which you may be able to access your superannuation early. These fall under the five main areas of severe financial hardship, compassionate grounds, terminal illness, permanently physically or mentally incapacitated or temporarily incpacitated.
Find out more about early release of superannuation in our guide.
Superannuation Withdrawal During Covid
Between April and December 2020, eligible Australians who had experienced Covid-19 hardship were also able to access up to $10,000 of their super during the 2019–20 financial year, and an additional $10,000 between 1 July 2020 and 31 December 2020.
Super Lump Sum Withdrawals
If you have reached your preservation age and met a condition of release you will be able to withdraw your superannuation as a lump sum or an income stream. If you want to withdraw it as a lump sum, check that your superannuation fund allows it (most large funds do).
You can then contact your fund directly or look for an “Apply for payment” form on their website which you need to complete and certify. You can apply for some of your superannuation to be withdrawn as a lump sum, or all. Keep in mind that if you withdraw all of your superannuation you will completely close the account and lose any insurance benefits your account may have provided you.
Super as Income Stream
The other option is to transfer your superannuation to an account-based pension with your current superannuation fund (or any superannuation fund). You should be able to do this online with your existing fund, or via an application form if it is an account-based pension with a new fund.
You will need to specify how often you want to be paid and how much. There are minimum annual pension drawdown rates if you don’t want your pension to lose its tax-free status.
Minimum annual drawdown rates currently range from between 2% of the balance to 7% depending on your age, but will revert to pre-covid levels of between 4% to 14% in the financial year 2023/2024.
Partly Retired?
If you have reached your preservation age you can access a transition to retirement pension (also known as an income stream or TRIS) which allows you to keep working part time while you maintain an income potentially commensurate with your former full-time income.
You can do this by transferring some of your superannuation to an account-based pension with your superannuation fund. You will not be able to transfer this kind of income stream into a lump sum
How Much Tax do you Pay on Superannuation withdrawals?
If you are over 60 and have retired and are in a taxed fund (which most superannuation funds are) then you will pay no tax on a lump sum withdrawal. Tax on income earned in account-based pensions is also zero if you are over 60.
But if your preservation age is younger than 60 you may need to pay some tax depending on whether or not the funds have already been taxed within the fund, and how much in excess of the low rate tax threshold (currently $215,000) the amount you are withdrawing is.
These can become quite complex calculations and the ATO has a detailed explanation here.
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Frequently Asked Questions (FAQs)
What is the minimum withdrawal from superannuation?
If you are retired and have reached your preservation age, there is no real minimum lump sum withdrawal amount. There are, however, annual minimum pension payments that must be paid depending on your age.
Can you withdraw super to pay off debt?
Once you reach your preservation age and meet a condition of release you can do whatever you like with the sums you withdraw.
What is the superannuation withdrawal age?
The minimum age is 60 if you were born after 1 July 1964.
What are the superannuation withdrawal rules when moving overseas?
The ATO says that if you are an Australian citizen or permanent resident, your superannuation is subject to the same rules regardless of where you are based.
How super much can I withdraw?
Once you meet a condition of release you can withdraw as much as you like as a lump sum, depending on your superannuation fund.
