Rise in the Preservation (Retirement) Age
Before an SMSF starts paying a transition to retirement income stream (TRIS) to a member, the member must have reached their preservation age.
This is the minimum age that a member can access their preserved super benefits without satisfying another condition of release.
From 1 July 2015, the legislated rise in the preservation age, which is now based on date of birth, comes into effect.
It applies to anyone born after 30 June 1960.
If a member turned 55 before 1 July 2015, they qualify for a TRIS and the change in the preservation age won’t affect them.
A member who turns 55 between 1 July 2015 and 30 June 2016 cannot start a TRIS during the 2015/16 financial year, because their preservation age is 56.
The preservation age continues to rise until it reaches 60.
For members born between:
- 1 July 1960 to 30 June 1961, the age is 56, and a TRIS can start in 2016/17.
- 1 July 1961 and 30 June 1962, it’s 57 and a TRIS can start in 2018/19.
- 1 July 1962 and 30 June 1963, it’s 58 and a TRIS can start in 2020/21
- 1 July 1963 and 30 June 1964, it’s 59 and a TRIS can start in 2022/2023.
The preservation age will be 60 for those born after 30 June 1964, and a TRIS can start from the 2014/25 year and onwards.
Trustees may face penalties if the payment rules are breached.
Ref: ATO website – Self Managed Super Funds – Rise in the preservation age