WITHDRAWING YOUR SUPERANNUATION
When can I withdraw my money?
Generally you can withdraw your non-preserved contributions (ie money you have paid into your fund and not claimed a deduction for) at any time. However, preserved moneys can usually only be withdrawn when you retire.
You cannot withdraw preserved contributions, until you:
You should also keep in mind that if you have been contributing over a number of years, the law has changed what is considered as preserved contributions. This means that although you may have thought that contributions were not preserved, this may not be the case. After 1 July 1999, the law changed so that all contributions are considered to be preserved.
What is severe financial hardship?
There are two requirements:
The decision about the second requirement is made by the fund trustee, although the Australian Prudential Regulation Authority has produced guidelines for trustees to use when making these decisions. A copy of these guidelines is on the APRA web site (there's no direct link so just type in Guidelines for Trustees in the Search function).
Note, if you are over the age of 55 there may be additional requirements. Contact the Australian Prudential Regulation Authority for advice.
The maximum amount that can be withdrawn in these circumstances is $10,000, the minimum is $1,000.
What are "compassionate reasons"?
Compassionate reasons are defined in the Regulations and include where you have expenses for yourself or a dependant when:
You must first apply to the Australian Prudential Regulation Authority and you must also meet any of the fund's specific requirements.
How is it paid?
If you withdraw money from your superannuation you can choose to receive this by lump sum or in the form of regular payments, like a pension.
If the benefit is paid as a pension, your accumulated contributions are left in the fund, which uses it for reinvestment and the fund pays you regular "pension-like" payments.
It's also possible to take the lump sum and reinvest it somewhere else. If you do this, you can also be paid regular payments - this is often called an "annuity".
Another option is an "allocated pension", which is a pension that allows you to withdraw capital lump-sums at any time.
Lump sum or pension/annuity?
Which is best? Of course this depends on your individual circumstances. But for most people it is useful for the retirement benefit to be paid as a form of pension/annuity. Some advantages are:
How much tax will I pay?
From 1 July 2007 withdrawals from superannuation are tax free for most people aged 60 or more. For people between 55 and 60, a part of the withdrawal will be tax free and part will be taxed at a concessional rate. The payments can be taken as a lump sum or by way of an income stream.
Can I retire early?
You can retire any time you like, but you may not have an immediate right to access your superannuation.
What if I die before retirement?
If you have made a binding nomination and appointed a beneficiary, this person will receive your funds. Note, some funds do not allow binding nominations.
If you havent done this, the trustee decides who they pay the money to based on what is set out in the trust deed.
Note, it is the nomination that is important when it comes to superannuation, not your will.
What if I become disabled?
Whether this is because of a medical condition or an injury, funds will convert the superannuation benefit into a disability benefit - different funds have different conditions.
There are two types of disability:
A payment for temporary disablement will vary between funds - check the explanatory booklet that is distributed to members. The trust deed will tell the trustees what to do in this situation, but usually there will be a pension-type payment until you return to work.
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