The current conditions of release allowing individuals to access their superannuation benefits by way of satisfying a definition of retirement are set to change significantly next year, an SMSF technical specialist has said.
Currently, an individual can satisfy one of two legislative limbs that can classify them as being retired and able to draw down their retirement savings.
“The first limb applies where a person has reached their preservation age, which is currently 59, but is less than age 60,” Accurium head of education Mark Ellem told delegates at SMSF Professionals Day 2023 in Brisbane last week.
“Under this limb there are two requirements, the first of which is that an arrangement of gainful employment has to have ceased. Not all arrangements of gainful employment, but an arrangement of gainful employment.
“The second requirement is the trustee must be reasonably satisfied that the individual member won’t be gainfully employed on either a full-time or part-time basis in the future, full-time being 30 hours a week and part-time being 10 hours or more a week.”
Ellem pointed out the second limb allowing a person to satisfy the definition of retirement and subsequently access their superannuation benefits legally is for them to have ceased an arrangement of gainful employment after they have attained the age of 60.
Further, he noted under this definition the trustees of the super fund do not have to be satisfied the member in question will not be gainfully employed on either a full-time or part-time basis in the future.
“However, consider the effect of 1 July 2024. What’s happening on 1 July 2024 with regard to these rules? What’s the current preservation age? It’s 59 and has been increasing from age 55. What’s it going to get to? 60. When is it going to get to 60? On 1 July 2024,” he said.
“So on 1 July 2024, when preservation age hits 60, it will effectively mean the first limb becomes redundant because you will no longer be able to attain preservation age that is less than 60 when the preservation age will be 60.
“So effectively the retirement condition of release will be down to the second limb only after 1 July 2024.”
Mark Ellem’s presentation at SMSF Professionals Day 2023 explores more than just this aspect of legally accessing superannuation benefits. To attend the event in either Melbourne or Sydney, visit https://web.cvent.com/event/e52ab0af-a2d3-46ef-bd98-4c91b6509c7a/summary?RefId=Summary to register.