retirement age

Retirement Age

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There is no mandatory retirement age in Australia. You don’t have to retire. It is just an option you have once you reach a certain age.

Retirement Age in Australia

Australia has no official retirement age. You can work as long as you like. But if you want to access your super or claim the age pension, then you must have reached a certain age before you can do that. 

To access your super, you must have reached your preservation age. And to claim the government age pension you must have reached your pension age.

What your preservation and pension ages actually are depends on your date of birth.

Perservation Age

To claim your super you must have at least reached your preservation age, unless you have met a special condition of release that allows you earlier access to your super under special circumstances like severe financial hardship or permanent disability.

The minimum preservation age is 55 years if born before July 1960 and 60 if born in July 1964 or later with a staged transition for anybody born in between these dates as follows:

56 if born between July 1960 and June 1961.
57 if born between July 1961 and June 1962.
58 if born between July 1962 and June 1963.
59 if born between July 1963 and June 1964.

Pension Age

To qualify for the age pension you need to meet four conditions. And one of these conditions is that you have reached pension age.

Your pension age depends on your date of birth. It is 65 years if born before July 1952 (and even younger for women born before 1949) and 67 if born in July 1957 or later with a stage transition in 6 months increments for anybody born between these dates.

65 years and 6 months if born July 1952 to December 1953
66 years if born between 1954 and June 1955
66 years and 6 months if born July 1955 and December 1956

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If something doesn’t make sense, please reach out to use. There might be a simple answer to your query.

 

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

 

Liability limited by a scheme approved under Professional Standards Legislation.

age pension

Age Pension

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75% of Australians of pension age receive the age pension – be it a partial or full pension.

Age Pension

You don’t automatically receive the age pension when you hit a certain age. You need to actively apply for this government-funded benefit by submitting the relevant Centrelink forms to Centrelink. Centrelink is part of the Department of Human Services of the Australian Government.

To qualify you need to meet four conditions.

1 – You need to be of pension age.
2 – Be an Australian resident for social security purposes.
3 – Pass the income test.
4 – And pass the asset test.

# 1   Pension Age

The first condition is that you must be of pension age. Your pension age depends on your date of birth and is :

65 years if born before July 1952
65 years and 6 months if born July 1952 to December 1953
66 years if born 1954 to June 1955
66 years and 6 months if born July 1955 to 1956
67 years if born in 1957 or later.

If you are a woman born before 1949 your pension age is even lower than 65 years.

# 2   Australian Resident

The second condition is that you need to be an Australian resident and must reside in Australia on the day you make your claim.

An Australian resident is an Australian citizen or a permanent visa holder or a protected Special Category visa holder from New Zealand.

The rules around residency tightened on 1 July 2018 when the Enhanced Residency Requirements for Pensioners came in. Under these new rules you now need to prove 15 years of continuous Australian residency when applying for a new age or disability support pension, unless you meet one of the following two exceptions. 

You either had 10 continuous years of Australian residency including at least 5 years between age 16 and pension age.

Or you had 10 continuous years of Australian residency and proof you have not received activity tested income support for cumulative periods of five years or more. 

Existing Exemptions

Existing exemptions will stay the same. So you don’t need to meet these residency requirements, if you are receiving a widow, widow B or partner allowance when reaching pension age. Or if you are or were a refugee. Or if you are a woman and your partner died while you were both Australian residents, provided you were an Australian resident for at least 2 years before your application. But we do shake our heads at this one. Why only if you are a woman? What about a stay-at-home dad whose late wife was the bread winner?

Before July 2018

Before July 2018, the residency rules were more lenient. You needed to have been an Australian resident for at least 10 years. But these 10 years didn’t have to be continuous. You were able to add up the years over multiple stays,  provided one of those stays was at least 5 years.

Australia has a social security agreement with over 30 countries. If you reside and/or work in one of these countries, you might still count as an Australian resident for social security purposes thanks to the special rules in these agreements.

# 3   Income Test

To be an eligible individual you must satisfy two tests: an income test and an asset test. And you need to pass both tests to qualify. The test that delivers the lowest amount of entitlement is the one that will determine your entitlement. 

The income test assesses your fortnightly income against thresholds set by the government. If your fortnightly income exceeds the full income threshold, then your entitlements are gradually phased out down to a cut-off point.

The thresholds vary depending on your family status, living arrangement, disability and other factors. 

Deemed Income

If you own financial assets (such as shares, term deposits or since 2015 super), then the income test doesn’t actually use the actual income earned from these assets. Instead the test uses deemed income.

Deemed income is when you assume a rate of return even when that rate isn’t necessarily what you actually earn on your investment. 

Work Bonus

If you choose to work while on the age pension, then you are entitled to a Work Bonus. This bonus is $250 per fortnight and works like an offset in the income test. You can accumulate unused work bonuses up to a certain threshold. 

# 4   Assets Test

For the assets test you determine the value of your assessable assets less any relevant debt against set asset thresholds. The test looks at your assets worldwide but then grants you certain exemptions, for example for your home.

An asset is essentially anything you own which has monetary value and can be converted into cash – no matter how liquid or illiquid the asset might be. But certain assets and asset classes are exempt from the test.

If your total assets are below a threshold, you pass the asset test. If they exceed the threshold, your entitlements are phased out down to a cut off point.

Timing

You only become entitled to the age pension from the date Centrelink receives your claim form and all supporting documents. So if money is really tight, make sure you have all your papers ready before your pension age birthday.

So these are the four conditions to qualify for the age pension. If you have a question, please reach out to us. There might be a simple answer to your query.

 

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

 

Liability limited by a scheme approved under Professional Standards Legislation.

 

Preservation Age

Preservation Age

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At what age can you access your super? What does your preservation age have to do with this? 

Your Preservation Age

Preservation age is highly relevant to anybody born on 30 June 1964 or earlier. And completely irrelevant to anybody born after that. And it is highly relevant while below 60 and completely irrelevant once you hit 60.

Access to Super

Super is meant for your retirement.  And so the legislator has put tight controls on when you can access your super. Before you get access, you must meet a condition of release. 

There are preserved and non-preserved benefits and there are special and general conditions of release.

Preserved

Most Australians have preserved super benefits. These benefits are preserved until you meet a condition of release. There are various conditions of release, some linked to your preservation age.

Non-Preserved

Very few Australian have non-preserved benefits. These benefits don’t require a condition of release and hence have nothing to do with your preservation age or age in general.

Special Conditions of Release

Until you meet a general condition of release, the only way to access your super is by meeting a special condition of release. Special conditions of release have nothing to do with your age.

Instead, they apply when the going gets tough and cover incapacity, severe financial hardship, terminal medical conditions and other scenarios requiring compassion.  They also include the First home super saver scheme.

General Conditions of Release

Most Australians access their super after meeting a general condition of release. There are four general conditions of release.

1 – Reaching preservation age and retiring.
2 – Reaching preservation age and not retiring, but starting a TRIS.
3 – Turning 60 and ceasing an employment arrangement.
4 – Turning 65

Once you turn 60, your preservation age is no longer relevant.

Perservation Age

Preservation age is the minimum age at which you can access your super if you retire or start a TRIS. Before that only a special condition of release can help you.

It is 55 if born in June 1960 or earlier, and 60 if born in July 1964 or later with a staged transition if born between these dates.

Pension Age

Preservation age is not pension age. They are two different things. Preservation age is about accessing your super. Pension age is about qualifying for the age pension.

Pension age is the age that you first become eligible to claim the age pension. It is 67 if born in 1957 or later and 65 years if born in June 1952 or earlier with a staged transition of 6 months increments for anybody born in between these dates. 

The Gap

You can access your super well before you can qualify for the age pension. If born in 1964 or later, there is a gap of 7 years between the preservation age of 60 and the pension age of 67.

So in the worst case scenario your super just has to cover this gap, before you can qualify for the age pension.

If you have any questions, please reach out to us. There might be a simple answer to your query.

 

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Retirement Age

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

 

Liability limited by a scheme approved under Professional Standards Legislation.

super by age

Super by Age

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Super by age – super for you is not like super for another. Many rules are linked to your age. 

Your Super By Age

Super rules change as you age. What you can or can’t do with your super right now will be different to what you can or can’t do with your super some years into the future.

But not every birthday is important in super land. Some don’t matter at all. Some matter a lot. The ones that matter the most are turning 18 and then 25, reaching preservation age, turning 60, 65 and possibly 67 for the age pension – and then turning 75.

0 – 18

Your super is the last thing anybody will think about right now, but super rules do apply to you from the day you are born. Like anybody else – irrespective of your age – you

– can receive non-concessional contributions into your super;
– pay 15% on any income in accumulation;
– need to comply with all investment rules around super;
– qualify as your parents’ SIS dependant;
– and can’t access your super unless you meet a condition of release.

But different to most – while under 18 – you

– can only make personal concessional contributions if you run a business;
– can only act through a legal guardian due to your legal disability;
– qualify as your parent’s tax dependant – irrespective of anything else;
– can receive your parents’ super as a death benefit pension;
– are only entitled to SG if you work ≥ 30 h/week for ≥ $450/month.

18 – 25

Turning 18 is a big day in super land. A lot changes on that day. From now on you

– can make personal contributions without having to run a business.
– act in your own name and no longer need a legal guardian;
– are entitled to SG irrespective of hours worked;
– no longer qualify as a child tax dependant.
– qualify for a child death benefit pension if financially dependant and < 25;

25 – Preservation Age

Once you turn 25, you can no longer qualify for a death benefit pension from your parents.

Preservation Age – 60

If you were born on 1 July 1964, then preservation age doesn’t mean anything to you. Preservation age is only relevant to you if you were born before 1 July 1964.

Reaching preservation age means two things. It is easier to access your super. And you pay less tax than before when you do. Your preservation age depends on your date of birth and is

55 if born 30 June 1960 or earlier
56 if born 1 July 1960 to 30 June 1961
57 if born 1 July 1961 to 30 June 1962
58 if born 1 July 1962 to 30 June 1963
59 if born 1 July 1963 to 30 June 1964

There are two ways to access your super from now on. You either start a pension when you retire with no intention to work again – changing your mind later is ok.  Or you start a transition-to-retirement-income-stream (TRIS) without the need to retire.

Both a pension and TRIS require minimum pension payments that increase with age. In addition, a TRIS has a 10% limit that a pension doesn’t have. 

Since you access your super before you turn 60, you will pay some tax on the taxable component of any benefit payments.

60 – 65

You can now access your super as long as you cease an employment arrangement. You can start a pension or cash it all in and move to Timbuktu. Accessing your super after your 60th birthday is tax-free.  So waiting saved you a lot of tax. 

65+

This is a big birthday in super land. And there are good news and bad news.

The good news is that you have free access to your super. You don’t need to retire. You don’t need to cease an employment arrangement. 

The bad news is that – apart from super guarantee payments from your employer – you can no longer make concessional or non-concessional contributions unless you meet the work test, meaning you must work at least 40 hours within 30 consecutive days in a financial year. 

67+

Let’s step away from super land for a moment. The age pension lives by its own set of rules. One false move can forever stop you from qualifying.  The eligible age for the age pension is 67 years of age, unless you were born in 1956 or earlier.

There are several conditions to meet before you qualify for the age pension. Just turning 67 is not enough. Please listen to Tax Talks episode # 121 about the age pension.  

75+

No more voluntary contributions. None at all. Whether you pass the work-test or not. So the only way to still get contributions into your super is through your employer’s superannuation guarantee payments.

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And that’s it. That is your super by age in a nutshell. Please reach out to us if you have a question. There might be a simple answer to your query.

 

MORE

Preservation Age

Age Pension

Retirement Age

 

Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

 

Liability limited by a scheme approved under Professional Standards Legislation.