Meeting the Retirement Condition of Release

The retirement condition of release allows members to gain unrestricted access to their superannuation and to convert transition to retirement income streams to retirement phase (where earnings are tax free).

This condition of release is the most commonly used by members aged between preservation age and 64 –once a member reaches age 65, this is a separate condition of release.

Ceasing to be gainfully employed

In all circumstances, one requirement of the retirement condition of release is that an arrangement under which the member was gainfully employed, has come to an end. It’s therefore important to explore what being gainfully employed means, and when such an arrangement ceases.

Gainfully employed has two components requiring a person to be:  an employee or self-employed, and receiving some form of gain or reward in return for their employment or self-employment.

A person is considered self-employed if they are a sole trader or partner in a partnership. In contrast, a person running a business through a company or trust will not be considered self-employed, but could instead be an employee of the company or trust.

If you are an employee, the arrangement will only come to an end at the time there has been a formal termination of the employment arrangement. 

Where a member is self-employed the member will only cease to be gainfully employed if they cease to run that business –  once the business is wound up or wholly disposed of.

Other steps:

Trustees of superannuation funds must be satisfied that a member has met the retirement condition of release and genuinely intends to cease working.

There can be some grey areas in relation to this condition of release, seek advice to ensure you understand how this may apply to your situation.

General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial or tax adviser before making any investment decisions.