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  • Conditions of release

    To cash preserved benefits or restricted non-preserved benefits, a member must satisfy one of the conditions of release. Unrestricted non-preserved benefits may be cashed at any time.

    Some conditions of release restrict the form of the benefit (for example, lump sum or income stream) or the amount of benefit that can be paid. These are known as 'cashing restrictions'.

    Common conditions of release

    The most common conditions of release for paying benefits are when the member:

    • has reached their preservation age and retires
    • has reached their preservation age and begins a transition-to-retirement income stream
    • ceases an employment arrangement on or after the age of 60
    • is 65 years of age (even if they haven't retired)
    • has died.

    There are some special circumstances where at least part of a member’s super benefits can be released before the member has reached preservation age.

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    Preservation age

    Access to super benefits is generally restricted to members who have reached their preservation age.

    Date of birth

    Preservation age
    (years)

    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

    Retirement under super laws

    For retirement there are no restrictions on the form in which the benefits can be taken.

    If the member is:

    • under 60 years of age – they can access their preserved benefits only when they reach preservation age, cease gainful employment and have no intention to become gainfully employed in the future
    • at least 60 years of age – they can access their preserved benefits when they leave a job.

    If a member who is 60 or over ceases one employment arrangement but continues in another employment arrangement, they may cash all benefits accumulated up to that time. All amounts accrued after that date will be preserved or restricted non-preserved benefits and can't be cashed until a fresh condition of release is met.

    Preservation age – transition to retirement

    Preservation age is the minimum retirement age at which a member is normally able to access their preserved benefits. Subject to the governing rules of your fund, members who have not retired may access their super with a transition to retirement income stream once they have reached their preservation age.

    A transition to retirement income stream must:

    • be account-based
    • not be commuted unless the member has met a condition of release with no cashing restrictions
    • meet the minimum pension standards
    • not exceed a maximum of 10% of the account balance at the start of each financial year.

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    Turning 65

    A member who has reached age 65 may cash their benefits at any time. There are no cashing restrictions, which means the benefits can be paid as an income stream or a lump sum.

    A fund member is not compelled to draw down their super once they reach a particular age. They can keep their benefits in the fund indefinitely. The only time it is compulsory for a fund to pay out a member’s benefit is when a member dies.

    Special conditions of release

    In special circumstances at least part of a member’s super benefits can be released before the member has reached preservation age.

    As trustee, you must ensure that the member has met a condition of release before you release any funds, and check that the governing rules of your fund allow it. It's possible that a benefit may be payable under the super laws but not under the rules of your fund.

    Generally, rollovers to other super funds don’t require the member to satisfy a condition of release, subject to the governing rules of your fund.

    Payments of benefits to members who have not met a condition of release are not treated as super benefits – instead, they will be taxed as ordinary income at the member's marginal tax rate. Significant penalties may also apply to you as trustee and to your fund.

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    Terminating gainful employment

    Subject to the governing rules of your fund, where a member (who has not met another condition of release) has ceased employment with an employer who had contributed to the member's fund, on termination:

    • all preserved benefits may be paid, but they must be taken as a lifetime pension or annuity, which can't be commuted into a lump sum (unless the preserved benefits are less than $200, in which case the member can cash the benefits without restriction)
    • all unrestricted non-preserved benefits can be cashed out on request from the member (no cashing restrictions).

    Permanent incapacity

    A member's benefits may be cashed if they cease gainful employment and you're satisfied that the member is unlikely, because of ill health, to engage in gainful employment that they are reasonably qualified for by education, training or experience. There are no cashing restrictions on payment of benefits.

    Temporary incapacity

    A member's benefits may be paid if you're satisfied that the member has temporarily ceased work due to physical or mental ill health that does not constitute permanent incapacity. In general, temporary incapacity benefits may be paid only from the insured benefits or voluntary employer funded benefits.

    It's not necessary for the member's employment to fully cease but, generally, a member would not be eligible for temporary incapacity benefits if they were receiving sick leave benefits. The benefit must be paid as an income stream for the period of the incapacity and can't be commuted to a lump sum.

    Severe financial hardship

    To release benefits under severe financial hardship you need to be satisfied that the member:

    • can't meet reasonable and immediate family living expenses
    • has been receiving relevant government income support payments for a continuous period of 26 weeks and was receiving that support at the time they applied to the trustees.

    The payment must be a single gross lump sum of no more than $10,000 and no less than $1,000 (or a lesser amount if the member's benefits are less than $1,000). Only one payment is permitted in any 12-month period.

    Alternatively, if the member has reached their preservation age plus 39 weeks, you need to be satisfied that the member:

    • has been receiving relevant government income support payments for a cumulative period of 39 weeks since reaching their preservation age
    • was not gainfully employed on a full-time or part-time basis at the time of applying to the trustees.

    If you release benefits under these circumstances, there are no cashing restrictions.

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    Compassionate grounds

    Benefits may be released on specified compassionate grounds if all the following conditions are met:

    • a member does not have the financial capacity to meet an expense
    • release is allowable under the governing rules of your fund

    The amount of super that you can pay on compassionate grounds is limited to what is reasonably needed. It is paid as a lump sum.

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    Terminal medical condition

    If a member has a terminal medical condition and two medical professionals certify that the condition is likely to result in the member’s death in the next 24 months, the balance of their super account may be paid as a tax-free lump sum benefit. There are no cashing restrictions.

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    First home super saver scheme

    The First home super saver (FHSS) scheme allows your fund members to save for their first home inside their super. Your members can do this by making voluntary concessional and non-concessional contributions to their super. When your members are ready to receive their FHSS amounts, they can request a release from us to withdraw personal contributions they have made into super since 1 July 2017, along with associated earnings.

    If your member's request to release an FHSS amount is successful, we will issue you with a release authority letter showing the amount you are required to send to us. We will also send you a release authority statement form, which you will need to complete (this must be completed in all cases, including for partial releases or where you are unable to release any amounts). You are required to comply with this release authority within ten business days of the date of the letter.

    Even if your member has not made voluntary contributions to your fund, the FHSS amount can still be released from their account subject to the applicable cashing order of benefit rules. Once you have sent any FHSS release amounts to us, we will withhold the appropriate amount of tax, and in some cases offset the remaining amount against any outstanding Commonwealth debts. We will then pay the balance of the FHSS release amount to your member.

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    Last modified: 13 Mar 2019QC 46861