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Getting money out of super

Conditions of release with 'nil' cashing restrictions

Section: 12.3

Summary table

Retirement on or after preservation age
Attaining age 65
Death
Permanent incapacity
Termination of gainful employment (restricted non-preserved amounts)
Terminal medical condition
Termination of gainful employment with a standard employer-sponsor of the regulated super fund on or after 1 July 1997 where the member's preserved amounts in the fund at the time of the termination are less than $200
Being a lost member who is found, and the value of whose benefit in the fund, when released, is less than $200

Retirement
The definition of retirement depends on the member's age and is summarised as follows:

In the case of a person who has reached a preservation age that is less than 60:

  • an arrangement under which the member was gainfully employed has come to an end, and
  • the trustee is reasonably satisfied that the person intends never to again become gainfully employed for 10 hours or more each week.

In the case of a person who has attained the age of 60
An arrangement under which the member was gainfully employed has come to an end, and either of the following circumstances applies:

  • the person attained that age on or before the ending of the employment, or
  • the trustee is reasonably satisfied that the person intends never to again become gainfully employed for 10 hours or more each week.
Australian Prudential Regulation Authority (APRA) Guidance
APRA Superannuation Circular No I.C.2. (para 68 and 69) provides further clarification for members retiring after the age of 60:
  • A member with a preservation age of less than age 60 who ceases gainful employment before age 60 may still retire after age 60, provided that the trustee is satisfied, at the time of the benefit claim, that the member intends to never again be gainfully employed either part-time or full-time.
  • Apart from the circumstances set out in the preceding paragraph, when a member has reached age 60, 'retirement' occurs when an arrangement under which the member was gainfully employed has ceased on or after the day the member reached age 60.

Permanent incapacity

Definition of permanent incapacity

Permanent incapacity, in relation to a member, means ill health (whether physical or mental), where the trustee is reasonably satisfied that the member is unlikely, because of the ill health, to engage in gainful employment for which the member is reasonably qualified by education, training or experience.

To be 'reasonably satisfied' a trustee will usually request medical evidence in the form of two doctors' certificates to that effect. This is to also satisfy the requirement for the payment of a disability super benefit (refer to section 7.8).

The SIS definition of permanent incapacity above is sometimes referred to as an 'any occupation' definition of permanent incapacity because it relates to gainful employment 'for which the member is reasonably qualified by education, training or experience'.

Total and permanent disablement (TPD)
A Product Disclosure Statement (PDS) will usually state a definition of TPD for insurance purposes (for the actual wording of the definition, please refer to the insurance contract). An insurer will determine the definition of TPD which may be an 'any occupation' or 'own occupation' definition.

Any occupation vs own occupation insurance definitions of TPD 
An insurer generally defines TPD in one of two ways:

Any occupation - the insurer may define TPD as various circumstances which leave a person unable to engage in gainful employment in any occupation for which the member is reasonably qualified by education, training or experience (any occupation). The probability of an insurance payout under this definition is lower than an 'own occupation' definition, but is more compatible with the SIS permanent incapacity condition of release.

Own occupation-the insurer may define TPD as various circumstances which leave a person unable to work again in their own occupation they held just prior to total and permanent disablement. The probability of an insurance payout under this definition is higher than an 'any occupation' definition, but is less compatible with the SIS condition of release.

If TPD insurance is held in super, regardless of whether a person has met the insurer's definition of TPD, it will be the SIS definition of permanent incapacity which must be met to release the proceeds from super. The SIS definition of permanent incapacity is an 'any occupation' definition. This means that if a member has satisfied an 'own occupation' definition of TPD, the insurer may pay the insured benefit into the member's superannuation account but the trustee may not be able to cash out the benefit if the member does not satisfy the broader SIS definition of permanent incapacity as it is an 'any occupation' definition.

Note: From 1 July 2014, new personal insurance policies within super are only allowed to the extent that they align with the death, terminal illness, permanent incapacity or temporary incapacity condition of release.

Termination of gainful employment (restricted non-preserved amounts)
There are no cashing restrictions for restricted non-preserved benefits where a member terminates gainful employment with an employer who had, or any of whose associates had, at any time, contributed to the regulated super fund in relation to the member.

Terminal medical condition
Since 1 July 2007 a 'terminal medical condition' exists in relation to a person at a particular time if the following circumstances exist:

  • two registered medical practitioners have certified, jointly or separately, that the person suffers from an illness, or has incurred an injury, that is likely to result in the death of the person within a period that ends not more than 12 months after the date of certification
  • at least one of the registered medical practitioners is a specialist practising in an area related to the illness or injury suffered by the person, and
  • for each of the certificates, the certification period has not ended.

For more information on the tax treatment of terminal medical condition payments, refer to section 7.2.

Last modified: Tuesday, May 2, 2017