Superannuation preservation age and preservation rules
For years we work hard knowing that the day we retire, there is a great pool of funds that will become available to us named superannuation that has been building over the years with our employer contributions and our additional personal contributions when we could afford to add extra.
And then the day comes when we need to fall back on our super, we need either to withdraw a portion or the full super balance or commence a form of a retirement income stream to provide for our ongoing living expenses. Or maybe you would like to commence a Transition to Retirement Pension See: “Can I access super and continue working – Transition to Retirement”.
But often it appears to be a very confusing topic to know when you can actually have access to your superannuation savings. At what age, or in what situation you are able to do anything with your super savings? I have already created: “When can I access my super, please?” and today we will continue this topic from the preservation rules perspective.
Superannuation is not like your savings in the bank account or even your investment portfolio. Any money outside of the superannuation environment you have full control over, with superannuation savings, not so much. You have to fallow superannuation rules and you have to comply with superannuation legislation.
So today we will discuss the rules you have to meet in order to have access to you super savings. I will explain preservation rules and your preservation age.
When talking about access to your superannuation savings, the first thing to understand and comply with are preservation rules. Preservation rules are to prevent you from having access to your superannuation savings before you satisfy conditions of release.
1. Preservation rules
Within your superannuation fund there are number of different benefits (pool of funds that was contributed to your super fund in a different period in the past):
- preserved benefit – those are all contributions made and all earning after 30 June 1999 – this benefit will only be paid out to you when you meet conditions of release.
- restricted non-preserved benefit – contributions made between 1 July 1983 and 30 June 1999 – to access this benefit you also need to meet conditions of release
- unrestricted non-preserved benefit – that portion of superannuation savings you can access at any time if your super fund’s rules allow it.
Please check your superannuation fund statement, you will most likely see that majority of your super savings consist of preserved benefit. If this is the case, you have no choice but to wait for the time when you meet conditions of release to have access to your savings.
I will create a article explaining conditions of release in details, however one of the main conditions of release is meeting your preservation age. Sometimes it is not enough to just reach your preservation age, there could be other conditions that you have to meet, but most certainly this is one condition that is most likely required if you wish to access your super in the earlier years of your retirement, rather than later.
2. Preservation age
If you wish to have access to your super savings as early as possible, because you just do not wish to continue working then you really need to understand what preservation age is and figure out when you are meeting yours.
So if your reach your preservation age and you additionally meet conditions of release, this will provide you with your earliest timing of your access to your super benefits.
Your preservation age depends on the date of your birth, and it works as per table:
To make it easy for you, if you were born before 1st January 1964, you have already reached your preservation age, therefore you met half of the conditions of release. Therefore now, all you have to do is to meet the rest of the requirements of conditions of release, which as mentioned before I will explain next week.
And one more important information, your preservation age is different to your Age Pension eligibility age.
So just as a reminder, on 1st July 2021, the Age Pension age was increase from 66 years to 66.5. Therefore, if you were born between 1 July 1955 and 31 December 1956, you have to get to 66.5 years of age to be eligible age-wise for the Age Pension benefit.
From 1st July 2023, the Age Pension age is rising to 67 for those born after 31 December 1956.
But please don’t forget that you can apply for Age Pension 13 weeks before you actually reach your edibility age. but obviously that is providing you know that you will pass Income and Assets Tests. If not, of if you calculate that you might only get a small part of Age Pension, please speak with a financial planner and receive the full advice that is property focused on maximizing your Age Pension benefit.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
