There are currently three categories of superannuation benefits. There are different rules for calculating these benefits depending on when the benefits where accrued.
In general, the SIS Regulations require the benefits to be preserved or retained in the superannuation system, until certain conditions are met. Each of these conditions is known as a ‘Condition of Release’
Preserved
Generally no accessible until a condition of release is met.
Restricted non-preserved
Generally not accessible until a condition of release is met, although an additional condition of release is available.
Unrestricted non-preserved
Accessible at any time.
If a member has unrestricted benefits, they are permitted to take a lump sum or commence a pension with these benefits at any time regardless of their age. However, if a member has preserved or restricted benefits, there may be restrictions on when and how the benefits may be drawn from the fund.
A member’s preserved and restricted benefits become unrestricted benefits when a member satisfies a condition of release and there are ‘nil’ cashing restrictions.
A cashing restrictions specifies how a benefit is required to be drawn.
There is no concept of retirement before a member’s preservation age. If a member has not reached their preservation age, they cannot be ‘retired’ for superannuation purposes.
If a member never worked for gain or reward, they cannot meet the retirement definition and so must wait until age 65 to access benefits.
Members aged between 60 and 65 can choose to satisfy either the first limb or second limb definition. For those person utilising the first limb definition, their intention must be to permanently retire. For those using the second limb, a cessation of gainful employment after age 60 is all that is necessary.
There are important considerations to be made when accessing benefits in regards to the form that benefits can be drawn and also any restrictions that the Fund’s Trust Deed may stipulate.
It is also important to note that when situations change for the member different classification restrictions may arise or change, including if a member returns to work.
If you’d like further information on any of the above, please feel free to contact our office.
Kyla Dalton – Accountant
