When can I access my Superannuation fund before retiring?
The quick answer policy planners would like to give you is never or when you are too ill to work or if you are dead. The whole Superannuation scheme is a set as a way to get citizens to save for their retirement. Retirement planning is one of the most important issues in many countries’ financial agenda due to the special circumstances surrounding pension funds. Why is that the case and how can you access your super fund before you retire will be the main issues this article will seek to answer.
As a general rule we don’t like to save. There are so many things to do and enjoy that saving money you could spend and enjoy now just seems a little dull and boring. Before, many of us could rely on government pension funds that all workers could expect to receive when they turned 60 or 65. With the drop in birth rate and an ever older population average we are struggling to pay for the current pension never mind future pensions. For these reasons it is increasingly important for us to take responsibility of our own pension funds to cover our retirement expenses.
It is therefore a great idea to avoid touching your super for as long as you can no matter how hard things are. With the power of compound interest a buck today can become dozens or even hundred by the time you reach 60 or 65. However there are times when you have little or no choice and need to access your pension fund savings. How do you go about this with funds that are designed to be iron clad until your fulfill the release requirements of your super fund? The answer is to have a good understanding of the terms and conditions of your super fund.
The first term you must understand is preservation age. This is the minimum age you can begin to access your super fund. This age does not necessarily coincide with your retirement age. For anybody born after 1960 the preservation age is 60. For anybody born before it varies from 55 to 60, check the Australian Taxation Office for more details.
The next question is what kind of benefits do you wish to release. There are three super benefit categories, preserved, restricted non-preserved and unrestricted non-preserved. Each category has different rules that regulate when and how they can be cashed in.
Preserved benefits, have a pretty fitting name, you cannot generally touch them until you have statisfied release conditions, more on them later.
Restricted non-preserved benefits can be paid to you as long as your employer has been making your superannuation contributions and that employment has been terminated.
Unrestricted non-preserved are benefits that your voluntarily kept in the super system once you had met a condition for release. You can access these benefits whenever you want.
Conditions of release.
So what are the conditions on which you can access your super fund benefits.
They are simple, you must be 65, or reach preservation age and stop working permanently. You can also die, but we don’t recommend that option. Becoming permanently incapacitated, not a great option either. In cases where the benefit is small, less than $200 you can receive the cash if your employment is terminated or you are a lost member that is found, a little super prodigal son.
You can also access your super fund in extreme cases like when you need the money to pay for medical expenses, have a terminal medical condition or on other compassionate grounds. If you are experiencing extreme financial hardship you may also qualify, really needing a new plasma will not qualify you I’m afraid.