Payment of benefits

Preservation age
Preservation age is generally the age that you can access your super benefits. A person’s preservation age depends on their date of birth, as set out in the following table.

Date of birth Preservation age (years )
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
After 30 June 1964 60

Paying super benefits to members

A member can only access all or part of their super benefits if they satisfy one of the conditions of release specified by superannuation law.
If you have satisfied a condition of release and your SMSF’s governing rules allow it, you can generally pay a super benefit as:

  • a lump sum;
  • an income stream (pension or annuity); or
  • a combination of both.

It’s possible for your SMSF to pay super benefits and still have members contributing to it.

Conditions of release

Conditions of release are the events your member needs to satisfy to withdraw benefits from their super fund. The conditions of release are also subject to the rules of your SMSF (as set out in the trust deed). It's possible that a benefit may be payable under the super laws, but can’t be paid under the rules of your SMSF. The most common conditions of release for paying out benefits are:

  • Retirement: Actual retirement depends on a person’s age and, for those below 60 years of age and on their future employment intentions. A retired member can’t access their preserved benefits before they reach their preservation age.
  • Transition to retirement (attaining preservation age): Members who are under 65 and have reached preservation age, but remain gainfully employed on a full-time or part-time basis, may access their benefits as a non-commutable income stream.
  • Attaining age 65: A member who reaches age 65 may cash their benefits at any time. There are no cashing restrictions. (It isn't compulsory to cash out a member’s benefits merely because they have reached a certain age.)

There are a number of other circumstances in which benefits can be released, such as incapacity, severe financial hardship, and temporary residents leaving Australia, terminal medical condition and terminating gainful employment. Some of these permit early access to benefits before reaching preservation age. There are specific rules for each of these and some have restrictions on the way the benefits can be cashed.

Minimum pension standards

The pensions you pay must satisfy all of the following requirements:

  • The pension must be account-based, except in limited circumstances;
  • You must pay a minimum amount at least annually;
  • You cannot increase the capital supporting the pension using contributions or rollover amounts once the pension has started;
  • A pension being paid to a member who dies can only be transferred to a dependant or beneficiary of that member;
  • You cannot use the capital value of the pension or the income from it as security for borrowing; and
  • Before you can commute a pension, you must pay a minimum amount in certain circumstances.

Minimum annual payment

You must pay a minimum amount each year to a member from that member’s pension account. The minimum amount is worked out by multiplying the member’s pension account balance by a percentage factor. The amount is rounded to the nearest 10 whole dollars. The following table shows the relevant percentage factor based on the member’s age.

Age Reduced minimum withdrawal % for the 2012-13 financial year Standard minimum withdrawal % for 2013-14 financial year onwards
Under 65 3% 4%
65 – 74 3.75% 5%
75 – 79 4.5% 6%
80 – 84 5.25% 7%
85 – 89 6.75% 9%
90 – 94 8.25% 11%
95 or more 10.5% 14%