Paying Benefits to Members

Retirement

Actual retirement depends on a person’s age and, for those less than 60 years old, their future employment intentions. A retired member can’t access their preserved benefits before they reach their preservation age.

• For people less than 60 years old - A member who is less than 60 years old and who has reached their preservation age retires when the arrangement under which they were gainfully employed ceases and the member does not intend to be gainfully employed for at least 10 hours a week, in the future.

• When a member reaches 60 - When the member has reached 60 years old, their retirement occurs when an arrangement under which they were gainfully employed ceased on or after they reached 60 years old or the member does not intend to be gainfully employed on a full-time or part-time basis. There are no ‘cashing restrictions’ for retirement.

• For members who are 60 years old or over - If a member who is 60 years old or over gives up one employment arrangement but continues in another employment relationship, they may cash all preserved and restricted non-preserved benefits accumulated up until that time or not cash any preserved or restricted non-preserved benefits accumulated after that condition of release occurs.

• Attaining the age of 65 - If a member has reached the age of 65, they may cash their benefits at any time. There are no cashing restrictions once you are 65 years old or over.

Other conditions of release

• Terminating gainful employment after 1 July 1997 – benefits less than $200

• Terminating gainful employment – benefits of $200 or more

• Permanent incapacity

• Temporary incapacity

• Severe financial hardship

• Compassionate grounds

• Temporary residents departing Australia

• Terminal medical condition

• Rollovers and transfers

Death of member

The compulsory cashing of benefits is required is when a member dies. Your member’s benefits need to be paid out as soon as possible after the member’s death.

Types of pension benefits

Benefits from a super fund may generally be paid as a lump sum, income stream (pension) or annuity, provided the member has satisfied a condition of release (for example, retirement).

Actuary’s certificate to claim a tax exemption

If you are paying an income stream, you may need to get an actuary’s certificate to qualify for exemptions from tax on your SMSF’s income from assets used to make current pension payments as they fall due. The assets being used to provide the current pension payments are classed as segregated or the income may be exempt under a proportional method.

Disclaimer

Every effort has been made to offer the most current, correct and clearly expressed information possible within this site. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations may change.

These materials on this website are general in nature. It is made available on the understanding that the JH Business Services & Taxation is not thereby engaged in rendering professional advice. Before relying on the material in any important matter, users should carefully evaluate its accuracy, currency, completeness and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.