Whilst we have known for a number of years that the superannuation preservation age is due to increase to age 60, the change is finally upon us.

Clients born on or after 1 July 1960 will be subject to an increase in their preservation age. For example, a client born on 1 July 1960 will have a preservation age of 56. This means they will not reach their preservation age until 1 July 2016.

The preservation age increases by one year for every year that a client’s birthday is after 1 July 1960, with those born on or after 1 July 1964 having a preservation age of 60.

Preservation Age

 

Date of Birth   Preservation Age 
 

Before 1 July 1960

 

55

 

From 1 July 1960 to 30 June 1961

 

56

 

From 1 July 1961 to 30 June 1962

 

57

 

From 1 July 1962 to 30 June 1963

 

58

 

From 1 July 1963 to 30 June 1964

 

59

 

On or after 1 July 1964

 

60

 

The increase in preservation age impacts a number of important superannuation strategies, including:

  • Transition to retirement condition of release
  • Retirement condition of release
  • Severe financial hardship condition of release
  • Taxation of superannuation withdrawals – low rate cap of $195,000 applies to withdrawals between preservation age and age 60
  • Taxation of superannuation income streams – 15% tax offset applies to income stream payments between preservation age and age 60
  • Splitting contributions – the members spouse must be under preservation age at the time of the split or if between preservation age and 65, must declare they do not satisfy the retirement condition release.

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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.