Many superannuation rules become relevant for people over age 55 as this was the earliest age that you became eligible to access your superannuation.
Are you over age 55? Do you want to know the superannuation rules for over 55s?
If so, there is a lot of planning that you need to consider in regards to your superannuation – regardless of whether you are still working or not.
Prior to considering superannuation strategies as an over 55 year old, you should first read this article if you are over 65, or nearing 65.
Why is age 55 important for super?
Age 55 is the lowest preservation age for superannuation. This is the earliest age that someone can access their superannuation without being disabled or dying or in desperate need of funds. Therefore, superannuation rules for over 55’s is a totally different landscape and can provide many opportunities in relation to tax and lifestyle.
The Preservation age increases for those born after 1 July 1960, as follows:
|Date of Birth||Preservation Age|
|Before 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|
|After 30 June 1964||60|
Over 55 and Still Working?
If you are over your Preservation Age and still working, you are able to commence a Non-Commutable Account Based Pension (AKA TTR Pension, TRIP, TRIS).
I like to call it a TTR (transition to retirement) Pension.
A TTR Pension allows you to commence an income stream using some or part of your savings. This allows you to draw an income between 4 – 10% of your pension balance each year, calculated at 1 July of each year or at the date of commencement of the pension.
I have written a full article on TTR Pensions here. This is the only way that you are able to access your savings between ages 56-60 if you are still working.
Over 55 and Permanently Retired?
In order to have full access to your super once reaching your superannuation Preservation Age (minimum age 55), the following condition must be met:
– You need to permanently retire with no intention of returning to full-time or part-time work
If you meet this condition, you have full, unrestricted access to your super However, accessing your superannuation prior to age 60 is likely to incur tax.
In this instance, the most important thing that you need to find out first is the tax components associated with your super balance.
Your super balance can consist of three different tax components:
– Taxable Component
– Taxable (Untaxed) Component
– Tax-free Component (AKA Exempt Component)
Tax on Super Withdrawals Age 55-60
The tax that you pay on any superannuation withdrawals between age 55-60 is dependent on the components that make up your balance and the way in which you make the withdrawal (lump sum or income stream). If some of the withdrawal is made up of the tax-free component, this portion will always be able to be accessed tax free.
I have summarised the tax for the 2016/17 financial year below:
|Threshold||Tax-Free Component||Taxable Component||Taxable (untaxed) Component|
|First $195 000||0%||0%||15%|
|$195 000 – $1 415 000||0%||15%||30%|
|Over $1 415 000||0%||15%||45%|
|Tax-Free Component||Taxable Component||Taxable (untaxed) Component|
|0%||MTR less 15% rebate||MTR (no tax offset)|
If you would like anything clarified or have any further questions about Superannuation Rules for over 55’s or any other topics, please do not hesitate to leave a comment in the section below.
See this article for changes to superannuation rules from 1 July 2017.