Getting your super

Funding retirement

When you reach retirement you'll need to work out if you will access your super as a regular pension, a lump sum or a combination of both. There are rules around accessing your super early and heavy penalties if you break them.

Here we explain when you can legally gain access to your super and what factors determine how much you'll get.

When can you legally access your super?

You can access your super when you reach your 'preservation age'. This is the minimum age, set by law, that your super must be 'preserved' until. Your preservation age is currently between 55 and 60, depending on when you were born.

When you reach preservation age, you can access your super as long as you are permanently retired (or reached age 65). If you haven't permanently retired, you can still access part of your super via a transition to retirement pension.

Work out when you can access your super.

Super and pension age calculator

Defined benefit super members

Members of some defined benefit super funds can access a defined benefit pension from age 55, regardless of when they were born. Speak to your fund for eligibility requirements as each fund is different.

Taking your super as a retirement income stream, lump sum or both

You can choose to receive your super as a lump sum; a retirement income stream (e.g. $600 a fortnight), also known as an account-based pension; or a combination of both. If you choose to receive your super as a regular income stream, the money that you're not accessing continues to work for you and earn an investment return.

Super pension

Transferring your accumulation account to an account-based pension account means you will continue to receive a regular income. Many people find this much easier than having to look after a large sum of money themselves.

An account-based pension is similar to your super accumulation account, except instead of putting money into it you will be drawing money out of it. There is a minimum amount you must withdraw each year depending on your age, for example if you are aged between 65 and 74 you must withdraw at least 5% of the balance each year as income payments.

Investment returns of an account-based pension are not taxed and if you are aged 60 or over your income payments will also be tax free. Different rules may apply to untaxed or defined benefit funds. Check with your super fund for more information.

Transfer balance cap

On 1 July 2017 a limit was introduced on how much money can be held in an account-based pension. This is called the transfer balance cap and is currently set at $1.6 million. Details are available on the Australian Taxation Office (ATO) transfer balance cap webpage.

Cashing in your super

When you retire you can take your super as a lump sum. You don't have to take it all at once, you may decide to leave it in super and withdraw it a bit at a time as you need it.

Taking your super as a lump sum can have tax and Centrelink implications and is often not the best way to deal with your super. The returns on investments outside super are usually taxable. If you make a mistake you might not be able to put the money back into super.

If you are aged 60 or over you can withdraw your super tax free. If you are under age 60 you may have to pay tax depending on the components of your super. See Retirement income and tax for information about what makes up the different components of your super.

Super lump sum plus pension

Your third option is to take some cash and convert the rest to a pension. Most accumulation accounts and some defined benefit funds will allow you to do this. This gives you the flexibility to take a holiday, renovate your home or upgrade your car, for example, but still receive a regular income. Most account-based pensions will also let you withdraw lump sums in the future so you don't need to make these decisions straight away.

While having the flexibility is great, remember that anything you take out as a lump sum may reduce the amount of regular income you receive and affect how long you money will last. Seek financial advice if you need help working out what's best for you.

How much super will you get?

Your final retirement benefit depends on:

  • your employer's contributions over your working life
  • your own additional contributions
  • your investment returns
  • how much you pay in taxes and fees.

You may be entitled to a full or part Age Pension from Centrelink so your super can be used to top up your Centrelink income and improve your standard of living.

Work out how much income you are likely to have at retirement.

Retirement planner

Can you access your super early?

There are some very limited circumstances when you can access your super before you reach your preservation age:

  • Incapacity - if you suffer permanent or temporary incapacity.
  • Severe financial hardship - if you have received Commonwealth benefits for 26 continuous weeks but are still unable to meet immediate living expenses.
  • Compassionate grounds - to pay for medical treatment if you are seriously ill.
  • Terminal medical condition - if you have a terminal illness or injury likely to result in death within 2 years, as certified by two registered medical practitioners, at least one of whom is a specialist.

You may also be able to access your super early if you are permanently leaving Australia or if you have less than $200 in your super account.

Carefully consider whether you really need to access your super early. Seek advice if you're unsure. Accessing your super now may not be a long-term financial solution if money is tight and will reduce the amount you have for retirement.

See the ATO's early access to your super webpage for more information.

Super death benefits

Making choices about your super death benefit is very important, so it's worth spending a few minutes filling in the form from the super fund to set out where your money should go if you die. This will give comfort for you and your family, and avoid confusion and delays at the worst possible time.

Discuss your plans with your family and close friends so there are no surprises if they ever need to make a claim.

Who gets your super if you die

If you die, your super fund trustee normally pays your death benefit to one or more of your dependants or to your estate.

Smart tip

Update your nominations if your marital status changes or you have children.

For super death benefits, the term 'dependants' includes:

  • your spouse (this includes same-sex de facto partners)
  • your children
  • people with whom you had an interdependency relationship
  • people who depend on you financially.

Most super funds let you nominate who you want your death benefit paid to, either as a non-binding or binding nomination.

If you don't nominate someone, the super fund trustee will decide who your money goes to. This can lead to delays and may cause fights in your family.

Binding nomination

A binding nomination leaves your super fund trustee with no choice as to who gets your death benefit because you choose whether the money goes to:

  • one or more dependants; or
  • your legal personal representative, who must pay out the money according to your will.

Non-binding nomination

A non-binding nomination guides the super fund trustee on who will get your super benefit. However, the trustee still has the final say, especially if you nominate someone who doesn't depend on you. The trustee is not required to follow the instructions in your will.

How much is the death benefit?

The death benefit includes the total amount of money in your super account at the time of death plus any life insurance cover through the super fund.

Death benefit = super account balance + any life insurance payment

Defined benefit funds sometimes have different payment rules. If you're in a defined benefit fund, contact the fund to find out more.

Claiming super death benefits

If you have to make a claim for a death benefit, contact the deceased person's super fund and find out exactly what you need to do. It's a good idea to take notes and ask the trustee to send you copies of all the relevant forms and policies. This process may take several months, depending on the circumstances.

The way tax is applied to super death benefits depends on whether you're a dependant of the deceased person or not, and if the benefit is paid as a lump sum or income stream. See Tax and super for more information.

Super is a lifetime investment that will provide for you when you retire. Grow your super before you stop working so you can make the most of it after you retire.

Related links

Last updated: 12 Feb 2019