Changes to the superannuation preservation age start this year
Some history on preservation age changes
- The last significant change to the rules concerning preservation of benefits in superannuation occurred on 1 July 1999.
- That amending legislation also introduced a timeframe for an increase in the preservation age gradually from the current 55 years in 2015 to eventually 60 years of age in 2024.( See the Chart Below for the full break down).
- The 1 July 1999 changes basically directed that what were then referred to as deductible contributions, such as self-employed contributions and voluntary employer contributions (i.e. salary sacrifice contributions), and what are now considered to be non-concessional contributions, would be treated as preserved benefits.
- Prior to 1 July 1999, most of the preserved benefits were derived from Employer contributions only.
Preservation age changes – How will it work?
- On 1 July 2015, the preservation age for new ‘entrants’ will effectively become 56 years of age.
- Interestingly, no one will reach their preservation age in the year 1 July 2015 to 30 June 2016 (i.e. 1 July 1960 plus 56 years equals 1 July 2016).
- That same situation will then apply every second year until 1 July 2024 (subject to there being no legislative changes in the meantime).
How will this affect your pensions?
Until 30 June 2015, members had to reach 55 years of age, in order to access their superannuation by:
- meeting a full condition of release as a result of having permanently retired from employment; or
- commence a transition to retirement income stream.
From 1 July 2015, that will change since not all 55-year-olds will have reached their preservation age.
In other words, those turning 55 after 1 July 2015 will need to wait until 1 July 2016 before reaching their preservation age, and so on, for the years set out in the table above.
Does that apply to someone who is already 55?
No. If an individual is already aged 55 at 1 July 2015, but has neither met a full condition of release nor commenced a transition to retirement income stream, their preservation age will remain 55, regardless of when they eventually access their superannuation.
|Date of Birth||Preservation Age||Unit/From|
|Before 1 July||55||Until 30 June 2015|
|1 July 1960 to 30 June 1961||56||From 1 July 2016|
|1 July 1961 to 30 June 1962||57||From 1 July 2018|
|1 July 1962 to 30 June 1963||58||From 1 July 2020|
|1 July 1963 to 30 June 1964||59||From 1 July 2022|
|After 30 June 1964||60||From 1 July 2024|
Content credit: “Preservation: the end of an era” by Michael Harkin, June 3 2015