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 (see Paying superannuation death benefits).
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.
Access to super benefits is generally restricted to members who have reached their preservation age.
Date of birth
Before 1 July 1960
1 July 1960 – 30 June 1961
1 July 1961 – 30 June 1962
1 July 1962 – 30 June 1963
1 July 1963 – 30 June 1964
After 30 June 1964
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 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.
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.
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. For more, see Release authorities.
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. For information on the Kiwi Saver scheme, see Trans-Tasman retirement savings portability.
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. This is also known as illegal early release of super. Significant penalties may also apply to you as trustee and to your fund. For more, see TA 2009/1 Superannuation illegal early release arrangements.
Special conditions of release include:
- Terminating gainful employment
- Permanent incapacity
- Temporary incapacity
- Severe financial hardship
- Compassionate grounds
- Terminal medical condition
- First home super saver scheme.
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).
A member's benefits may be cashed if you're satisfied that their ill health makes it unlikely that they will engage in gainful employment that they are reasonably qualified for by education, training or experience.
Members may still be eligible where they meet the above criteria, but are undertaking other work, such as light duties in a different position or casual work in a different field.
There are no cashing restrictions on payment of benefits.
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.
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.
More information can be found by visiting, Services Australia – Early release of superannuationExternal Link.
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, see Early access to your super.
If a member has a terminal medical condition and 2 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. See more about access to super for members with a terminal medical condition.
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 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).
We will issue the release authority electronically via SuperStream where you are SuperStream enabled. When you receive an electronic release authority you are required to respond with an electronical release authority statement via the SuperStream Rollover message.
For both paper and electronic forms, you are required to comply with this release authority within 10 business days of the date of the release authority.
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.
For more information see SuperStream release authorities.How to meet a condition of release to access preserved benefits or restricted non-preserved benefits.