Unlocking your super while you're working!!

Transitioning to retirement presents an opportunity for you to access your super via a tax effective pre-retirement pension once you reach your preservation age. Unlike normal rules for accessing your super, if you're age 55 or over you don't need to retire or change jobs to access your money. You can receive income from the pension while salary sacrificing to super until you decide to fully retire.

If you're age 60 or over, this strategy may be even more beneficial to you as your pension payments are now tax-free - and you're still able to salary sacrifice.

Your preservation age

Under current superannuation law you must reach your 'preservation age' before you can access your super. Your preservation age depends on the date you were born.

Date of Birth Preservation Age
Before 1 July 1960 55
1 July 1960 to 30 June 1961 56
1 July 1961 to 30 June 1962 57
1 July 1962 to 30 June 1963 58
1 July 1963 to 30 June 1964 59
After 30 June 1964 60

Non-commutable income stream

Your pre-retirement pension must be via a 'non-commutable' income stream. Non-commutable means you can't convert the income stream to cash until you satisfy a full condition of release from super, such as retirement or turning 65. Your pre-retirement pension will work in exactly the same way as a standard superannuation pension, subject to the non-commutable requirements.

Because a pre-retirement pension is non-commutable, you should set funds aside to offset those funds that are preserved.

You should also keep in mind the possibility of redundancy or a forced or unplanned early retirement once you're over 55, which could interrupt this retirement strategy. You may need to review the strategy so that you stop drawing from your retirement savings.

For further information or to explore this strategy with Fred, Michael, Robert or Vlado, our Planners at CPB, please contact us by phone or use the 'contact us' form attached to our website.

Click on the link to the left for a case study that demonstrates the principals of Transitioning to Retirement.