A member’s benefits in a superannuation fund are subject to the preservation rules and will be allocated across one or more of the following three categories:

• Preserved;
• Restricted non-preserved;
• Unrestricted non-preserved.

Generally, members who have not retired will have preserved benefits, whereas a member who has retired or is at least age 65, will have unrestricted non-preserved benefits. It is uncommon for a member to have the second category of benefits.

When can a member access their superannuation benefits (no restrictions)?

Accessing superannuation benefits, with no restrictions, will be dependent upon the preservation status of a member’s benefits: 

Preservation status of benefits	Requirements to access (no restrictions)
Preserved	May be cashed on or after the satisfaction by the member of any of the following conditions of release1: * Retirement; * Death; * Terminal medical condition; * Permanent incapacity; * Attaining age 65 * Severe financial hardship where the member has attained their ‘preservation age’ + 39 weeks * Termination of gainful employment with a standard employer sponsor where benefits held by the fund are less than $200.
Restricted non-preserved	May be cashed on or after the satisfaction by the member of any of the conditions of release for preserved benefits. Can also be cashed where the member terminates employment with an employer who had previously contributed to the fund that holds the benefits.
Unrestricted non-preserved	This status has resulted due to the member previously satisfying a condition of release with a nil cashing restriction. Such benefits can be withdrawn from the fund either as a lump sum or an income stream, at any time.

What is a member’s preservation age?

Preservation age is the minimum age that a member must reach before they can access their superannuation benefits that are categorised as preserved, under the ‘retirement’ condition of release. Attaining preservation age also permits a member to access their preserved benefits in the form of a ‘Transition to retirement income stream’ (TRIS).  

Prior to 1 July 2015 a member’s preservation age was age 55. Therefore, persons born before 1 July 1960 have had the ability to access their superannuation benefits from age 55.  

The increase in preservation age was announced in the 1997-98 budget and subsequently became law. Since 1 July 2015 the preservation age has steadily increased from age 55 and will eventually increase to age 60 on 1 July 2024. A member’s preservation is based on their date of birth. 

Table 1: Preservation age based on date of birth: 

Date of Birth	Preservation age	Financial year will reach preservation age
Before 1 July 1960	55	already attained
1 July 1960 – 30 June 1961	56	already attained
1 July 1961 – 30 June 1962	57	already attained
1 July 1962 – 30 June 1963	58	already attained
1 July 1963 – 30 June 1964	59	2022-23
After 30 June 1964	60	1 July 2024 onwards when turn 60

For those born on or before 30 June 1963, they will have already reached their relevant preservation age (attained by 30 June 2021).

For those born from 1 July 1963 up to 30 June 1964, they will have to wait until their 59th birthday, the earliest being 1 July 2022, before they can access their preserved superannuation benefits. 

For everyone else, the earliest they will be able to access their preserved benefits will be 1 July 2024, when those who were born on 1 July 1964 turn 60.

Consequences for illegal early access of benefits 

Where a member accesses their preserved benefits in an SMSF in contravention of the benefit payment standards in the SIS regulations², there maybe the following consequences for the SMSF and/or the member:

• The SMSF could be made non-complying³;
• The SMSF trustee(s) could be issued with an SMSF administration penalty of 20 penalty units⁴;
• The benefit payment is not treated as a superannuation benefit and is fully assessable to the member, taxed at their marginal tax rate, plus applicable levies. The tax components of the benefit payment are not relevant. The member being at least age 60 also does not affect the payment being fully assessable⁵ .

In order to avoid penalties associated with breaching the access to preserved benefits rules, where you have a client looking to access their superannuation during 2021-22 under the retirement condition of release or as a TRIS, remember to check their preservation age. If they did not attain age 58 prior to 1 July 2021, they will not be eligible to access their superannuation until next financial year and only after their 59th birthday. 

Age pension age 

Another age that is important to individuals is the qualifying age to get the Age Pension. This is referred to as an individual’s ‘Age Pension age’. Whilst the Age Pension age is not aligned with the preservation age, it too has been increasing over time. Further, like the preservation age, an individual’s birthdate will determine their Age Pension age.  

The Age Pension age has been slowly increasing from 65 to 67 years. It’ll increase by 6 months every 2 years until the Age Pension age is 67 on 1 July 2023. The Age Pension age  increased to 66 years and 6 months on 1 July 2021. The final increase in the Age Pension age will be on 1 July 2023 when it increases to age 67.

1. From Schedule 1 to the SIS Regulations
2. Superannuation Industry (Supervision) Regulations 1994
3. Section 42A SIS Act
4. Section 166 SIS Act; a penalty unit has a value of $222 for offences committed one or after 1 July 2020
5.  Section 304-10 ITAA 1997