Rolling over or cashing out

As part of your retirement planning, you’ll need to decide what to do with your SASS deferred benefit. Unless you’re 65 or over, there are rules around when you can cash out your super.

Cashing out your deferred benefit

If you are a deferred member and would like to cash out your super, there are scheme rules to meet as well as Commonwealth super rules.

To access your benefit the scheme requires you to have reached your earliest retirement age , which for most members is age 58. There are very limited circumstances where you can access your money before this age.

Once you have reached your earliest retirement age, what you can then do with your super is then subject to Government rules. The Government decides the preservation age rules and other conditions of release. Whilst you can cash out the unrestricted non-preserved amount of your benefit at any time, and roll over the balance to another super fund, the preserved amount will need to stay in the super system until you meet the preservation rules and conditions of release¹. These rules are designed to encourage Australians to grow their super so they can retire with more money. This also helps to keep Australians in the workforce longer.

¹ Conditions of release rules, in addition to preservation age, require that if you are under age 65, you need to have permanently retired and not intend to work more than 10 hours a week, or if you are between age 60 and age 65, have left an employment after age 60 regardless of your future work intentions. Suffering a total and permanent disability, terminal illness, or death will also trigger release of super.

Continuing as a deferred member

Under the scheme rules, once you reach age 65 you need to meet a work test to keep your benefit deferred in the scheme. The work test requires that between ages 65-70, you work at least 10 hours a week and from age 70 at least 30 hours a week. If these work tests are not met, then you will need to either roll over or cash out your benefit or a combination of both. You will no longer be able to remain a member of SASS.

Options to start using your super

Once you have access to your super, you’ll need to decide what to do with your deferred benefit. You can:

• Cash it out and take it as a lump sum. It’s important to be aware that you are taking your money out of a tax effective environment
• Roll over to another super fund, and;
  • contribute to your super account to grow your super
  • pay yourself an income from your super while you continue to work by starting a transition to retirement income stream
  • start a Retirement income account
• Or a combination of these options

Tax considerations

You will not pay any personal income tax on money rolled over to another superannuation product. Whether you pay any tax on money you cash out of super will depend on:

• your age; and
• the taxable component of your benefit.

Your super will generally be comprised of a tax-free amount and a taxable amount. If you roll over or cash out only part of your benefit, the tax-free and taxable amounts will be paid in the same proportion as it would be paid on your total benefit. So, if your tax-free amount is 40% of your total benefit then it will be 40% of any amount you cash out.

Your tax-free amounts are always tax-free regardless of when they are paid to you. If you cash out super any time after preservation age and before age 60, the first $230,000 is tax free. Any amounts after that will attract a lump sum tax of 15%, plus the Medicare levy. From age 60 any amounts cashed out of super are not assessable for income tax purposes or lump sum tax.

Taxable amounts are also important in estate planning regardless of your age. There may be tax implications for non-dependent beneficiaries. It’s worth talking it over with an Aware financial planner² who can provide advice on how to minimise any tax implications.

² Financial planning services are provided by our financial planning business, Aware Financial Services Australia Limited, ABN 86 003 742 756 AFSL No. 238430.

Tax-free and taxable amounts

Making an application to access your benefit

You will need to complete the State Super SASS form 415 - Application for Payment of a Deferred SASS Benefit to access your money. You can elect to roll over your total balance, cash it out or a combination of both. You will no longer be a member of SASS. It’s important to note that once you cash out your super you may not be able to contribute all or part of it back into super, and you will miss out on the concessionally taxed environment.

State Super can help you with your application form and understanding the effect rolling over your benefit will have on your benefit entitlement.
 

• Contact Customer Service between 8:30am and 5:30pm (AEST) Monday to Friday on 1300 130 095.
• Email enquiries@stc.nsw.gov.au

Do you need early access to your SASS deferred benefit?

In some circumstances you may be able to withdraw your deferred benefit early. This includes:

• if you suffer total and permanent physical or mental incapacity^{^} that prevents employment in any occupation that would be reasonable to expect you to undertake.
• if you suffer from a terminal illness.
• on financial hardship or compassionate grounds (subject to eligibility conditions and payment limits).

For more information refer to the State Super SASS Fact sheet 13 - Optional deferred benefit

^{^}If a SASS member needs to withdraw their benefit because of total and permanent incapacity before age 65, any lump sum will have an additional tax-fee amount calculated.

What happens when a deferred member dies?

In the event of your death, the deferred lump sum benefit is payable to your spouse (including a de facto spouse). If there is no eligible spouse, the benefit is payable to your estate. This is unlike other super funds where you can nominate a beneficiary.

Although most of us avoid thinking about it, it’s important that the scheme can contact your spouse, family member or executor in the event of your death. You can add your contact details to your account by contact State Super Customer Service. It is preferable that this be provided in writing and the document will be added to your member record.

Why choose Aware Super for retirement?

We're retirement experts. We have retirement investment strategies which help safeguard your super, so you can relax and be confident that your super will go the distance.

Our investment approach is designed to give our members the confidence to enjoy their retirement and help make their income last the distance.

Retirement support and advice is part of the service for Aware Super members. Find out more.

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