This article addresses whether you are able to access your superannuation savings at age 55 and still continue to work.
You may have heard of people in your workplace or friends and family talking about how they are using their superannuation to supplement their work earnings, or using a ‘transition to retirement strategy‘ as a means of reducing their personal income tax.
Let’s begin with when you are able to access your superannuation.
In order to draw on your super, you need to have first met your superannuation preservation age.
If you have not reached your superannuation preservation age, the only way you are able to access your super is to be disabled (limited access) or suffering from financial hardship.
Accessing Superannuation At Preservation Age
Your superannuation preservation age signifies the age that you are able to begin withdrawing from your super. However, you may need to satisfy other criteria too.
The Preservation Age was once once as low as 55; however it is progressively increasing to age 60. The table below details the Superannuation Preservation Age based on your date of birth:
|Date of Birth||Superannuation Preservation Age|
|Prior to 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|On Or After 1 July 1964||60|
There are two ways of accessing your superannuation once you have reached your Preservation Age. One requires you to stop working and the other way allows you to access your super and still work.
Looking at the table above, you are only able to access your super at 55 and still work if you were born prior to 1 July 1960; otherwise you will have to wait until you reach age 56, 57, 58, 59 or 60 before accessing your super – depending on when you were born. These are the ages that matter for accessing superannuation in Australia.
Accessing Super While Still Working
Provided you have met your Superannuation Preservation Age, you are able to commence a Transition to Retirement (TTR) Pension while you are still working. There is no need for you to stop working whatsoever. A TTR Pension may also be referred to as a Transition to Retirement Income Stream (TRIS) or Non-Commutable Allocated Pension (NCAP) – they all mean the same thing.
For the purposes of this article, I will refer to it as a TTR Pension.
Accessing Superannuation: TTR Pension
You can access your super after age 55 (or whatever your Preservation Age is) by commencing a TTR Pension with some or all of your superannuation accumulation account (subject to the Transfer Balance Cap from 1 July 2017 as part of the new super rules – click to read more).
A TTR Pension allows you to withdraw between 4% and 10% of your TTR Pension Income Stream balance each year, as calculated on 1 July of each year. This amount is calculated pro-rata if the TTR Pension commences part way through a financial year.
A TTR Pension does not allow you to make lump sum commutation withdrawals from the pension account. All withdrawals must be in the form of pension payments between the 4% and 10% prescribed limits.
Also, if you have reached age 55 (or your Preservation Age) and are still working, you are unable to make lump sum withdrawals from your superannuation accumulation account.
Accessing Superannuation in Full at Preservation Age
A TTR Pension allows you to access your superannuation after reaching your Preservation Age while you are still continuing to work. However, as discussed above, this will only give you limited access (i.e. between 4% and 10% of your TTR Pension balance each year).
To have full, unlimited access to your superannuation you need to meet one of the three definitions of ‘Retirement‘.
One such definition includes “in the case of a person who has reached their preservation age that is less than 60: an arrangement under which the member was gainfully employed has come to and end and the trustee of the superannuation fund is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or part-time basis”
In simple terms, this means that you have full and unlimited access to your superannuation if you cease work after reaching your Preservation Age and never intend on returning to work on a part-time or full-time basis.
However, you are only able to access the superannuation savings that have accumulated up until that point. Any subsequent contributions after meeting the superannuation ‘retirement’ condition of release noted above will be inaccessible until you meet another condition of release.
Under these circumstances, you can access your super as an ordinary account based pension income stream or as a lump sum withdrawal (or a combination of the two)
Returning To Work After Accessing Superannuation
If you are under age 60 and accessed your superannuation via a TTR Pension, as noted above, there is no requirement for you to stop working. You are able to continue working throughout.
If you are under age 60 and met the superannuation ‘retirement’ condition of release by ceasing work with no intention to return, you are still able to return to work. Take note of the language used… no intention to return to full-time or part-time work…. This doesn’t mean that you can’t return to work; it just means that at that time you genuinely had not intention of returning to work and if someone were to objectively look at your life at the time you made such claims, all of your personal and financial circumstances would suggest that you had no intention of returning to work.
There is nothing to say that your intentions haven’t changed.
When Can I Access My Super Tax Free?
Everyone wants to know when they can access their super tax free!
There are two main tax components that make up your superannuation balance. The ‘Taxable‘ component and the ‘Tax Free‘ component. The ‘Taxable’ component is further broken down into the ‘Taxable (taxed)’ component and the ‘Taxable (untaxed)’ component.
Contact your superannuation provider to find the component mix of your superannuation balance. Everyone’s balance will be made up of different proportions of these components.
If you are above your preservation age, but under age 60, the ‘Tax Free’ Component of an income stream will be received by you completely tax free. The ‘Taxable (taxed)’ component will be taxed at your Individual Marginal tax Rate (MTR) minus a 15% offset, and the ‘Taxable (untaxed)’ component will be taxed at your MTR with no tax offset.
If you are over age 60, the Tax-Free and Taxable (taxed) components are received completely tax free and not assessed for tax. The Taxable (untaxed) component is taxed at your MTR minus a 10% offset.
If you are above your preservation age, but under age 60, the ‘Tax Free’ Component of a lump sum withdrawal will be received by you completely tax free. The ‘Taxable (taxed)’ component will be received tax free up to a lifetime indexed limit of $195,000 and taxed at 15% for any amount in excess of $195,000; and the ‘Taxable (untaxed)’ component will be taxed at 15% for the first $195,000, 30% for amounts between $195,000 and $1.395M (indexed) and 45% for amounts in excess of $1.415 M.
If you are over age 60, the Tax-Free and Taxable (taxed) components are received completely tax free and not assessed for tax. The Taxable (untaxed) component is taxed at 15% up to the lifetime indexed cap of $1.415M and 30% for any withdrawals in excess of $1.415 M.
Hopefully this article has given you a good understanding of whether you can access your super at 55 and still work and you can begin to understand how all of these rules affect the average retirement age in Australia.