Finance Update with Jovan Cvetkoski – Accessing Your Super

By Jovan Cvetkoski, Financial Adviser and Director, Knight Group

11 min

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About this episode

When can you actually get to your superannuation – and could drawing on your balance earlier ever work in your favour? In this Finance Update, Jovan Cvetkoski, Financial Adviser and Director of Knight Group, tackles a topic he says confuses most Australians, citing a survey where more than half lacked confidence about the rules.

He explains the key trigger points: age 65 as a full “condition of release”, a preservation age of 60 for anyone born after 1 July 1964, and a transition-to-retirement option between 60 and 65 for people still working.

Jovan walks through how moving super into an account-based pension can cut the tax on earnings from 15% to zero, how redundancy can trigger full access, and the stricter rules for financial hardship, compassionate grounds, incapacity, the First Home Super Saver Scheme, and temporary residents leaving Australia.

In this episode

When can you actually get your hands on your super?

Jovan explained that age 65 is a full condition of release – you have full access whether you’re working or not. Before that, your preservation age applies: for most people now (anyone born after 1 July 1964) that’s age 60. Between preservation age and 65 there are additional options if you’re still working.

What happens to your super tax bill once you hit 65?

At 65 you can move the majority of your super into an account-based pension – a private pension account that stays inside super. Jovan noted the benefit: earnings in that pension account go from being taxed at 15% to 0%. The trade-off is you must draw a minimum amount each year, which he put at around 4–5% of the balance.

Can you dip into your super between 60 and 65 if you are still working?

Yes – under a transition to retirement, Jovan explained you can access super tax-free but only between 4% and 10% of the balance. One strategy he described: pull money out of your own super, put it back in and claim a tax deduction. In his example, someone earning $100,000 with catch-up contributions available could put around $50,000 back in and reduce the income they’re taxed on from $100,000 towards $50,000.

Does getting made redundant give you a sudden backdoor key to your super?

Jovan explained that ceasing an employment arrangement between 60 and 65 – for example being made redundant, or stopping one of two jobs – technically gives you full access to your super. He gave an example of someone with $1 million at the time of redundancy who could move most of it into a private pension and pay zero tax on the earnings, even if they take another job a few months later.

Can you access super early for hardship or compassionate reasons?

Jovan explained these fall under limited conditions of release with strict rules. For financial hardship you generally need to have been on government support for 26 continuous weeks and be unable to meet living expenses, and you might only receive $10,000–$15,000 – it’s designed as a bridge. Compassionate grounds cover approved expenses such as medical treatment, palliative care, or mortgage assistance to prevent a home foreclosure, and again the amounts are limited.

What about the First Home Super Saver Scheme and other special cases?

Jovan described the First Home Super Saver Scheme as a way to withdraw up to $50,000 of voluntary contributions plus earnings towards a first home, saving some tax on the way in – noting it can suit the children or grandchildren of listeners. He also covered temporary incapacity (access via insurance or an income stream), permanent incapacity (full ongoing access if two doctors, one a specialist, agree you’re unlikely to return to suitable work) and the Departing Australia Superannuation Payment for temporary residents leaving permanently.

Key Takeaways

Age 65 gives full access to your super; for most people the preservation age is now 60 (born after 1 July 1964).
Moving super into an account-based pension can cut tax on earnings from 15% to 0%, with a minimum drawdown required.
Redundancy between 60 and 65 can grant full access to your super balance.
Early access on hardship or compassionate grounds is tightly limited and usually modest.
The First Home Super Saver Scheme allows up to $50,000 (plus earnings) to be withdrawn towards a first home.

Full episode transcript

Host: Jovan Cvetkoski, director and financial planner with Knight Group. Today you’re looking at accessing super. Have the rules changed because of the budget?

Jovan: They actually haven’t changed, but I find – personally and society-wide – that we’re all quite confused about when we can access our super. A recent survey found over 50% of Australians lacked confidence about the rules around access.

Host: Why would people want to draw on their super at a younger age?

Jovan: It can be to repay a mortgage or for urgencies. But from a financial-planning point of view, it can make sense to access your super at a trigger point when you’re legally able to, because there may be tax advantages. At age 65 super is essentially a free-for-all – a full condition of release, meaning full access whether you’re working or not. After 65 you can move the majority of your super into an account-based pension. It stays in super, like a private pension account, and the earnings go from being taxed at 15% to 0%.

Host: That’s worth it. Is there a catch?

Jovan: You have to draw a minimum – around 4% or 5% of the total you move into that pension. A lot of people work past 65: you can start a private pension, take the money out once a year and put it back in, and you go from 15% tax to no tax. For anyone born after 1 July 1964 – most of us now – the preservation age is 60. Between 60 and 65, if you’re still working, you can access super tax-free under a transition to retirement, but only 4% to 10% of the balance.

Host: Why would you do that?

Jovan: Say you wanted to put more into super but didn’t have the cash. You could pull money out of your own super fund, put it back in and claim a tax deduction. For example, someone with $450,000 in super, earning $100,000, with catch-up contributions available, could put $50,000 in and go from being taxed on $100,000 to being taxed on $50,000. You move it from your super fund to your bank account and back – you could do it the next day.

Host: What about redundancy?

Jovan: If you cease a work arrangement between 60 and 65 – say you’re made redundant, or you stop one of two jobs – you technically have full access. If you had a million dollars at the time and intended to keep working, you could move most of that into a private pension and pay zero tax on the earnings, even if you get a job three months later. You just tick a box saying you’ve been made redundant.

Host: And financial hardship?

Jovan: That’s a partial or limited condition of release with strict rules. For financial hardship you have to have been on government support for 26 continuous weeks and be unable to meet living expenses – and you might only get $10,000 or $15,000. It’s designed as a bridge. Compassionate grounds cover approved expenses like medical treatment, palliative care or mortgage assistance to prevent a foreclosure – again, you won’t get much.

Host: What about the First Home Super Saver Scheme?

Jovan: This can be great for the children or grandchildren of listeners looking to buy a home. It lets you take out money you’ve put into super – up to $50,000 plus earnings – to buy your first home. You save some tax on the way in, then draw some out as a deposit. You have to be buying a house to get it released, you have to prove it, and you have to get the money out within a certain period. It can be a way for grandparents to say, ‘I’ll help you, but I want to see it go into super first’.

Host: And incapacity?

Jovan: If you’re temporarily incapacitated you can get access through insurance or an income stream – it’s not permanent. If you’re permanently incapacitated – two doctors, one a specialist, say you’re unlikely to ever return to suitable work – you have full ongoing access to your super, including the full capital. There’s also the Departing Australia Superannuation Payment for temporary residents who leave Australia permanently. My message to listeners: if you’re nearing 60, or between 60 and 65, it’s worth looking at your circumstances to understand whether there’s a benefit to accessing your super.

Host: Good point. Thank you, Jovan, as always.

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