Establishing whether gainful employment has ceased is very important in superannuation retirement rules and determining whether superannuation can be accessed.

This determination is particularly important for the definitions of ‘retirement’ for superannuation condition of release purposes.

The term ‘retirement’ is defined by regulation 6.01, subregulation (7) of the Superannuation Industry (Supervision) Regulations 1994.

By satisfying the definition of retirement, a member has unrestricted access to their accumulated superannuation savings. These savings can be accessed in the form of a lump sum, retirement income stream or combination of both.

Here is the definition of retirement, as defined by the SIS regulations, to provide some context around the importance of establishing whether gainful employment has ceased.

Source: SIS Regulations 1994 (6.01)

(7) For the purposes of Schedule 1, the retirement of a person is taken to occur:
   (a) in the case of a person who has reached a preservation age that is less than 60–if:
     (i) an arrangement under which the member was gainfully employed has come to an end; and
     (ii) the trustee is reasonably satisfied that the person intends to never again become gainfully employed, either on a full-time or part-time basis; or
   (b) in the case of a person who has attained the age of 60–an arrangement under which the member was gainfully employed has come to an end, and either of the following circumstances apply:
     (i) the person attained that age on or before the ending of employment; or
     (ii) the trustee is reasonably satisfied that the person intends to never again become gainfully employed, either on a full-time or part-time basis

Establishing Whether Gainful Employment Has Ceased

The definition of retirement is therefore slightly more flexible for an individual who has attained age 60. This is because an individual over age 60 merely needs to establish that an arrangement under which the member was gainfully employed has come to end. It does not require the member to have permanently ceased work with no intention of returning (as is the case with a person under age 60).

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Superannuation definition of ‘gainfully employed’

In establishing whether gainful employment has ceased, we first need to define ‘gainfully employed’.

Gainfully employed is defined under Regulation 1.03 of the Superannuation Industry (Supervision) Regulations 1994 as:

“employed or self employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment”

Superannuation definition of ‘full-time’ or ‘part-time’ work

The definitions of ‘full-time’ and ‘part-time’ employment for superannuation purposes is also important in determining whether a person is no longer gainfully employed. It is also defined under Regulation 1.03 as:

Full-time definition: “in relation to being gainfully employed, means gainfully employed for at least 30 hours each week”

Part-time definition: “in relation to being gainfully employed, means gainfully employed for at least 10 hours, and less than 30 hours, each week.

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Establishing Whether Gainful Employment Has Ceased Example

Detailed below are some scenarios to show whether or not gainful employment has come to an end under the rule and definition of ‘retirement’

Scenario 1

David is aged 61 and works 40 hours per week  as a train driver. He decides it is time to hang up his boots, so he ceases his role with the train company to spend more time with his grandchildren. David has met the definition of retirement and will have unrestricted access to his superannuation.

Scenario 2

Jenny, 63, works as a lawyer, but has always dreamed of opening up her own florist. She quits her job as a lawyer and has immediately met the definition of retirement, providing her with full access to her super. Two months later, Jenny opens a florist shop. This does not impact her ability to continue accessing her super; however any subsequent super contributions since her initial retirement will be preserved and Jenny will need to meet another condition of release to access those benefits.

Establishing-Whether-Gainful-Employment-Has-Ceased

Scenario 3

Stephen is a 58 year old news anchor. His workload is getting heavy, so he hands in his resignation and considers no longer work again. A few weeks later he decides he is missing his trade and takes up a role with another station doing cameo appearances during the weekend weather segment, totalling 8 hours per week. This cameo role satisfies his need to remain in the industry. As 8 hours is less than part-time, Stephen meets a superannuation condition of release and the definition of retirement, provided the trustee of his superannuation fund is satisfied that Stephen has retired and has no intention of returning to full-time or part-time work.

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Chris Strano

Chris Strano is a specialist independent superannuation author for SuperGuy.com.au - one of Australia's leading superannuation information resources.

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