What Happens To My Super If I Stop Working?

Wondering what happens to your super when you stop working?

Superannuation is a vehicle designed to help you save towards retirement and cover expenses when you decide to stop working.

You might associate superannuation with the place that your employer makes compulsory superannuation guarantee (SG) contributions to, as shown on your payslip.

However, it is also possible to make voluntary contributions, such as non-concessional contributions, salary sacrifice contributions or personal concessional contributions.

In a nutshell, the incentive of putting money into superannuation is the potential tax concessions on contributions and tax savings on earnings, compared to investing in your own name.

The downside is that you can’t access your super until you reach a certain age.
 

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What Happens To My Super If I Stop Working?

 
A superannuation account consists of to phases: Accumulation Phase and Pension Phase.

Generally, while you are working, all of your superannuation will be in accumulation phase.

When you stop working, you can then convert your superannuation to pension phase and draw an income to assist in covering retirement expenses, provided you have reached your superannuation preservation age.

Accumulation phase is an account that is able to accept any type of contribution.

Your account balance is invested in the way that you have decided to invest it.

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What happens to your super if you stop working is that the balance continues to remain invested.

The only difference, presumably, is that no employer contributions will be made to the account.

Also, if you have salary continuance insurance cover within your account, you may no longer be covered for this, as it generally requires you to be working to be eligible for a benefit.

If you are self-employed, there will be no change to your super.

Whether you are employed, self-employed, unemployed or not working, there is nothing stopping you from making voluntary contributions into your superannuation account.

I have shown a few superannuation examples here of the different types of contributions.

The only restrictions on super contributions are work test requirements when over age 65, age limits on certain contributions and the contribution caps.

You are not required to convert your accumulation account to pension phase once you stop working. Your account balance can remain in accumulation phase indefinitely.

You can even make lump sum withdrawals from your accumulation account, provided you meet certain conditions.
 

What Happens To My Super If I Am Unemployed?

 
Again, there will be no change to your super if you are unemployed, apart from the fact that you won’t have an employer making contributions into your account; and any salary continuance cover may no longer be valid.

You will generally not lose any superannuation as a result of being unemployed.
 

Unemployed Super Contributions

 
If you are unemployed, you will not be receiving any employer SGC; however, you do have the ability to make voluntary non-concessional or concessional contributions to your account.

You should always consider the contribution caps prior to making any contributions and determine if there are any contribution restrictions due to your age.
 

Defined Benefit Scheme (Not Working/Unemployed)

 
If you have a defined benefit superannuation scheme, whereby your benefit is calculated on a  multiple of your salary, years of service, etc. then your final benefit may be impacted by the fact that you are not working.
 

What To Do With Superannuation When Not Working

 

Intending On Returning To Work

 
If you are temporarily stopped working and plan on returning to work, you may consider using this an opportunity to review your superannuation account by comparing it with other superannuation funds available and/or the investments that your balance is invested in.

Your comparison of superannuation funds might include a review of fees, available investment options and features.

You might also review any life insurances held within your account and your superannuation death benefit nominations.

There is nothing else that you really need to do with your superannuation when not working. Your balance will continue to be invested.

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If you have spare income or savings, you may consider making additional contributions to super to reduce the risk of fees and insurance premiums eroding your super balance.

If you do return to work, you will generally have the ability to nominate your existing superannuation fund as the fund that you would like your new employer to make employer SG contributions to.

If you have reached your superannuation preservation age, you may consider using some or all of your super accumulation balance to start a transition to retirement (TTR) income stream.
 

Not Intending On Returning To Work

 
If you do not intend on returning to work and have reached your superannuation preservation age, you might consider starting an account based pension.

Alternatively, you can simply leave your superannuation savings in accumulation phase.

The main difference between accumulation phase and pension phase is the difference in tax rates applied to investment earnings and the requirement to receive minimum pension income payments from a pension account.
 

Super Eaten By Fees

 
If you are concerned that your super will be eaten by fees, you should ensure that you understand the fees associated with your superannuation fund.

Fees are an inevitable part of holding a superannuation account. However, fees can differ significantly between superannuation providers.

To find out the fees charged by your superannuation fund and others, you should read the super fund’s Product Disclosure Statement, which can usually be obtained from their website, or by contacting the superannuation fund directly.

Chris Strano

Chris Strano created SuperGuy to help the average punter navigate through the complex and ever-changing super rules. It has since become one of Australia's leading digital super resources. Subscribe to SuperGuy's YouTube channel for the latest strategies to boost your super savings. https://www.youtube.com/c/superguyau

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24 Comments

  1. Jodie Duong

    Hi,

    I’m trying to look for my mum’s super. She is retired and has no idea what fund she was with. We have check the ATO and they don’t have any accounts linked to them. What is the best way to search?

    Reply
    • Chris Strano

      Hi Jodie,
      Submitting this form to the ATO is generally the best way to find lost super. Super funds are required to notify the ATO if they have been unable to contact you or not received any contributions in the last 5 years.
      If you have already done this, consider contacting your mums previous employer. They will be required to have record of which super fund her super was paid to. Then you can contact the super fund. You could even try looking at her previous pay slips to see if it is stated on there.

      Reply
  2. Al

    I have been unemployed on a pension for some time and have lost all my super due to fees. Is there any thing I do can about this?

    Reply
    • Chris Strano

      Hi Al, you should be able to make a complaint through the Superannuation Complaints Tribunal https://www.sct.gov.au/ if you feel you have been treated unjustly

      Reply
  3. Susan

    Hi,Hope you can help, I got a lump sum of my super to pay my mortgage as I’m 60 digned declaration to say i wont work coz I’m retiring unfortunately im having trouble with not enough money to live on. Was wondering what would happen if i worked more than 10 hrs a week?

    Reply
    • Chris Strano

      Hi Susan,
      If you signed the declaration that you have reached your preservation age and have no intention of returning to work, then you should still be able to return to work, provided your intention at the time was genuine.
      If you signed a declaration stating that you have ceased an employment arrangement after reaching age 60, then there is nothing stopping you returning to work.
      Related Posts
      Definition of Retirement for superannuation
      Can I Access My Super at 60 and Still Work?

      Reply
  4. Jacqui Warner

    Hi Chris, my son has just received a bill from a superfund for over $870- An Appreticeship Co he was with for 6 mths before Company folded could not get him into another Apprenticeship. The Super he had I’m assuming is now long gone shouldn’t that fund stop collecting their premiums once the balance was zero? He is only 17. He doesn’t have the money to give them.

    Reply
    • Chris Strano

      Hi Jacqui, I’m not entireley sure what the bill is for. Is it for super fees or insurance premiums? Either way, I don’t see why he would need to pay the super fund. He does, however, need to understand that failure to pay insurance premiums will likely result in the insurance policies being cancelled. You may want to contact the superannuation complatins tribunal if he is being pressured into paying super fees without having a balance https://www.sct.gov.au/

      Reply
  5. Louise

    Hi , I retired at age 58 in order to become a carer for my elderly mother . I had reached preservation age and withdrew my super in order to purchase a car suitable for her .
    I am currently receiving carers pension .
    What are the tax implications for having withdrawn this super ?
    Also I have just received a family law split super which I have placed in my original fund , can I make contributions to this even though I am not working ?
    Advice appreciated . Thankyou

    Reply
  6. Belle

    Hi Chris

    I have a query as to what I should do in regards My Super. I am now for the past 5 years become a full time Carer Giver for my elderly mother who is in her mid 80’s. I have been informed by BT super that I must take out an Insurance policy from the 1st of July 2019 for them to cover the policy. My question is ‘Is this legal’ If I don’t pay this Insurance coverage I could/will loose my Super. As I am in my mid 50’s can I actually make my super a transition to a pension super.

    Reply
  7. Maria

    Hi Chris,

    I have bought a unit as my first home but after a couple of years I am thinking of renting it out.Would I be able to deposit my rental income into my (voluntary)super? Will I be required to pay tax on this contribution?

    Many thanks

    Reply
    • Chris Strano

      Hi Maria,
      Rent paid on a property owned in your personal name will need to be paid into a bank account in your name first – before contributing to super. The rent will be assessed at your individual tax rate. You can then contribute the rent to super if you like, as either a concessional or non-concessional contribution, subject to the contribution caps, your age (no age restriction if under 65) and your total superannuation balance (no issue if balance under $1.6M). Concessional contributions can provide you with a tax deduction equal to the contribution amount which, in essence, can offset the taxable rental income. However, concessional contributions generally incur contributions tax of 15%.
      Related Posts:
      Concessional vs Non-Concessional Contributions
      Concessional Contribution Cap
      Non-Concessional Contribution Cap

      Reply
  8. Jane

    Hi Chris,

    I stop working for 2 years and MLC super is asking me to reinstate and keep my insurance as I was inactive otherwise, it will be cancelled. I will not be working for quite sometime and I have few questions:
    1. Is my super fund going to be lost?
    2. Do I need to reinstate my insurance?
    3. I believe there will be deductions if I reinstate my insurance cause I’m not contributing to my super. Is this true?
    4. Is it advisable to cancel my insurance for time being?

    Cheers,
    Jane

    Reply
    • Chris Strano

      Hi Jane,
      1. No one can take your super away from you. It is only considered lost if your super fund loses contact with you for several years. But then they must pass it on to the regulator who gets in contact with you.
      2. You do not have to re-instate your insurance, but it can be difficult to get insurance in the future if you let this policy lapse.
      3. All insurance cover has premiums that you must pay, just like car insurance, house insurance, etc. The life insurances within your super also charge premiums. If you re-instate your insurance, the premiums will be deducted from your super balance. This is normal. If you do not want your super balance to erode due to premiums, you might consider making super contributions into the account equal to the insurance premium amount.
      4. I am only able to provie you with general information on here and cannot provide personal advice as to whether or not you need this insurance. Keep in mind though, if you cancel insurance it may be difficult to obtain in the future due to an increase in age or potential changes to your health. Also, you need to think about the financial impact on you/your family if you suffered an insurable event and did not have appropriate cover.
      Hope this helps,
      Chris

      Reply
  9. Rachael

    Hi Chris!

    As a stay at home Mum, what amount of money would you recommend I put into my super per week (I have recently started up my own business as well)

    Thank you,
    Rachael

    Reply
  10. Bruce

    Hello Chris,
    I’m over 60 and can access my super but I can’t get the pension till I’m 67, so I need to keep working for a bit longer.
    I will receive an inheritance later this yr of around 100k and would like to put it straight into my super.
    1) Will this still be taxes at 15%.
    2) If needed can I access that 100k at any time
    Thanks in advance.
    Bruce.

    Reply
    • Chris Strano

      Hi Bruce,
      Thanks for your enquiry.
      You can make concessional or non-concessional contributions to super. Concessional contributions generally incur 15% on entry (and can reduce your personal tax); whereas non-concessional contributions enter your super fund tax free (but do not reduce your personal tax). Without knowing your situation, I’m not sure which type/ratio of contributions would suit you best.
      If you are still working, you can have limited access to your super if required. Depending on your employment situation, you may be able to have full access. Unfortunately I cannot provide you with more definitive answers without knowing your situation.
      Hope this helps,
      Chris
      Related Posts
      Concessional vs Non-Concessional Contributions
      Can I Access My Super at 60 and Still Work

      Reply
  11. Cooper

    Hi Chris,
    I am 40 and came to Australia 6 years ago and am a citizen now. However due to some circumstances I will leave Australia for good and may never return. So,
    1) I have accumulated some super after working for 6 yrs (approx 40K). Once I leave Australia, what will happen to it as there will be no deposits of any sorts.
    2) Will I get anything once I reach 65 years of age?
    3) Someone said I have to pay a $50 pm fine if my super becomes 0. Is it True?
    4) Can I withdraw it when I leave Australia or What is the best way to deal with the situation?

    Many Thanks in Advance as I cannot find the answers anywhere.

    Reply
    • Chris Strano

      Hi Cooper,
      The answer to your questions depend on your type of super account. For the purposes of this, I will assume you have a standard super accumulation account.
      1. your super will continue to be invested in the investment option you have chosen. This should prodice long-term returns in excess of the fees associated. However, any personal insurances held within the account may deduct premiums from your super balance. Sometimes you get automatic insurance cover within super, but ut s not compulsory.
      2. Once you reach age 65 you should have unrestricted access to your super balance. Your super balance will be whatever it is now, plus any earnings between now and 65, minus any account fees, minus any insurance premiums.
      3. I have never heard of this and I would be extremely surprised if its true, but you should ask your super fund, as it would be super fund specific, but unlikely.
      4. You generally need to wait until you meet a superannuation condition of release before accessing your super, such as retirement after age 60 or reaching age 65.
      Regards,
      Chris
      Related Posts
      When Can I Access My Super?

      Reply
  12. Lisa

    Hi Chris I will be unemployed as of January 2020 and still have 3 years before I reach preservation age to access my super. Can I roll my super balance into my husbands superfund?

    Reply
    • Chris Strano

      Hi Lisa, it is not possible to rollover your super to your husband’s super account. However, you may be eligible to split some of the contributions made into your super account. Read here for more https://www.ato.gov.au/Forms/Contributions-splitting/
      Importantly, to split contributions, your husband must be under his preservation age, or aged between his preservation age and age 65 and not retired.

      Reply

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