By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
September 2026

Every new tax year sees a jump in people wanting to access their super and this year’s no exception.  Most underestimate how strict the rules are.

Some delay retiring so their payout is taxed at a lower rate.  Many simply want their money; others want the tax efficiency a super pension brings and, with the transfer balance cap now $2.1 million, some held off to get more into a tax-free pension.

Once you start a pension and move into retirement phase, fund earnings are tax-free whereas in accumulation phase they’re taxed at up to 15 per cent, with a one-third discount on capital gains for assets held more than 12 months.

For those with more than $3 million in super, Division 296 now applies an additional personal tax to earnings.

With all benefits from age 60 being tax-free (from taxed funds), there’s a huge incentive to get super into retirement phase.

When can I start a pension or withdraw my super?

The rules are strict; you must meet a ‘condition of release’ before starting a pension or withdrawing a lump sum.

Whilst early access is available in limited circumstances including financial hardship, permanent incapacity and terminal illness, most people must meet a retirement condition of release.

You can get your super at 65 even if you’re still working, as turning age 65 is a condition of release.

Retirement

Under super law, retirement is more than stopping work; it’s reaching preservation age (now 60), ceasing employment and intending never again to work 10 or more hours a week.  Merely reducing hours to under 10 a week doesn’t cut it.

You can stop working and retire younger, e.g. 57, but you won’t be able to access your super until at least 60.

If you’re 60 to 64, retirement for super purposes also occurs when you cease an employment arrangement even if you intend to work again.

Ron, 62, is both an employee and paid director of his private company.  He ceases working in the business – handing that role over to his son – and is paid his entitlements.  Although still a director, Ron can access his super having ceased as an employee.

There must always be a full and effective termination of employment where all entitlements, e.g. unused leave, are paid out.  Termination must be genuine and not a contrived arrangement.  Orchestrating a ‘Friday arvo, Monday morning arrangement’ purely to access super is not on.

For employees, it’s straightforward; leave work and get paid your entitlements, with no arrangement to be re-employed.

For the self-employed, ceasing work is harder.  It’s more than ending a contract or job; they need to stop trading or sell their business, cancel their ABN, and demonstrate they’re retiring.

Ivan, 61, is a consultant whose 12-month contract ends.  He hopes to pick up another but wants to start a tax-free pension.  The contract has ended but the arrangement under which he is gainfully employed has not.  Ivan remains a consultant, so he hasn’t satisfied the retirement condition of release.

Maya, 63, is a medical practitioner contracting her services to two clinics.  Ceasing work at one clinic does not satisfy the retirement condition of release.

For Ivan and Maya to establish retirement, they need to sell or wind up their businesses and receive no further income.

Your super on the date you retire is accessible but later earnings in accumulation phase and all contributions, including cashed out and recontributed amounts, are preserved until you meet a subsequent condition of release.

Zoe retired at 58 with no intention of working again.  At 60, she commenced a pension with her super.

At 61, Zoe makes a personal deductible contribution to reduce capital gains tax on an investment property she sold.  This contribution and earnings are initially preserved, but as Zoe is retired, she can access her benefits under the retirement condition of release.

Zoe doesn’t apply to access her benefits, so they remain preserved.

At 62, Zoe takes a job working 15 hours a week.  Her employer’s compulsory superannuation guarantee contributions are preserved.

She cannot access her preserved benefits, including the contribution (with earnings) made at 61, because her circumstances have changed and she no longer satisfies the retirement condition of release.

Transition to retirement

If you’ve turned 60, are still working and need your super, a transition to retirement (TTR) pension may be the answer but only if you intend to run a genuine income stream.

They’re ideal for anyone needing more to live on or looking to reduce debt and you don’t have to stop working or reduce your hours.

Pension payments are tax-free but underlying earnings are taxed at 15 per cent until the TTR pension moves into retirement phase, which happens at 65 or when you notify the trustee you’ve retired.  Then, the TTR pension is non-preserved, earnings become tax-free, the balance counts towards your transfer balance cap and the 10 per cent restriction on pension payments is removed.

Don’t start a TTR pension to take the maximum 10 per cent as one payment and switch back to accumulation phase.  One payment isn’t an income stream.  If it’s not an income stream, it can’t be a TTR pension.  Accessing super while working without it being a TTR pension is illegal early access.

Illegal early access

Illegal early access is a big concern for the ATO in overseeing the SMSF sector.  So, if you have an SMSF, be extra diligent in determining whether you’ve satisfied a condition of release; you obviously have a vested interest in accessing your own benefits.

The penalties for accessing super early are heavy.

And never backdate a pension

If you can access your super and wish to commence a pension, the sooner you advise your fund the better.

If you have an SMSF, don’t leave it to your accountant to tell you, while preparing the June 30 accounts, that you should’ve started a pension back at the beginning of the tax year.  And don’t backdate however appealing the tax outcome.  The start date is when the pension was genuinely established.  It’s not a bookkeeping adjustment, and backdating documentation is fraudulent.

There are reporting consequences too.  Transfer balance cap events must be reported to the ATO within strict deadlines, so a backdated pension will be reported late inviting scrutiny of the whole arrangement.