Nick Bruining Q+A: Just because you can access your superannuation at this age doesn’t mean you should

Question

My husband is 62 and has been offered a job with a new company.

He has been told that he will be able to access and withdraw his superannuation when he leaves his current employer, even though he will still be working.

Is that correct?

Answer

The information is correct. It is a quirk in the superannuation legislation that establishes a “condition of release” when a person “ceases an employment arrangement on or after the age of 60”.

The legislation does not require you to cease your main occupation to trigger this condition of release. In fact, a person could start a second job, cease that job and satisfy the condition of release to access their super.

Because your husband is over 60, and assuming his superannuation is in a conventional taxed fund, the benefit payable will be completely tax free.

While access to super can be appealing, be cautious of withdrawing funds simply because you can. Retaining funds in the tax-friendly superannuation environment for as long as possible is generally the best long-term strategy.

Financial planners would generally advocate accessing super under these circumstances to repay non-tax deductible debt such as personal loans or your mortgage.

The net tax benefit of repaying such debt is generally a better option than keeping the debt on a risk-return basis. That is, the returns on the super fund can be highly volatile compared with the certain interest cost of servicing a loan.

Question

I am a contract employee who has worked for a few employers over the past few months.

In planning for the second half of the financial year, I am trying to identify how much money has been paid into superannuation by these employers as I hope to maximise my concessional contribution cap for this financial year.

I remember reading about a shortcut method of finding this information, but I am unable to locate the source.

Can you assist?

Answer

You are referring to a little known but very useful tool accessible through the myGov portal.

If you establish a myGov account and then link the Australian Taxation Office service to MyGov, there is a great deal of information available.

The easiest way to link the ATO is to provide information contained on a recent income tax notice of assessment and account details for a bank account which paid you interest during the year. Once the link is set up, you click the tab labelled “superannuation”.

You will be presented with a number of drop-down options which will show all the contributions reported to the ATO from all sources.

This will allow you to establish the amount available to bring you up to the concessional contribution cap for 2024-2025 which is $30,000.

You’ll also find comprehensive information about your fund, including performance information

Throughout the site, there are little pop-up answers to common questions.

The system even looks at your occupation and can then suggest common tax deductions for that occupation. Just remember, however, that even if the suggestions are made, you can only claim the deduction if you have actually made the payment and have proof to show that you did.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association