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I run a small business and hold the titles of director and employee. It is through a company/ family trust structure. The business pays super contributions into my SMSF. I also work part time at a major retailer (14hrs/ wk) and they pay super contributions into an industry fund as part of the enterprise agreement.
If I gave up up the retailing job at age 60 would I satisfy a condition of release and be able to convert the funds in my SMSF and the industry fund accumulated up to that point in time, into a tax free account base pension whilst continuing to be employed by the business?
If I decided to go back to a retail job is there a time period that needs to be satisfied before I return to a second job?
A: The definition of ‘retirement’ in the superannuation legislation is important as it can determine whether a condition of release has been met to commence payment of a pension or lump sums. Once a person reaches age 60 ‘retirement’ is considered to have occurred when an arrangement under which the person was gainfully employed has ended. Gainful employment simply means paid for the activity undertaken. Therefore a person who is 60 will have retired where they have ceased at least one paid employment arrangement. Retirement means more than just stopping work with the intention that they will recommence the job within a short period. The cessation of the employment needs to be a full and effective retirement to meet the condition of release.
If you return to a second job with the same employer for whom you were previously employed you would need to be able to establish that the cessation of the previous employment was permanent and at that time there was no agreement or arrangement that you were to return to work. There is no time period that applies in these circumstances as it depends on the permanency of the cessation of the original employment
Where ‘retirement’ has occurred after reaching age 60 it is possible for a person to combine their superannuation benefits and use them to commence an account based pension. Don’t forget that from 1 July 2017 there is a limit of $1.6 million on the value that can be transferred into retirement phase to commence an account based pension which includes the value of pensions in place as at 1 July 2017 and pensions commenced from that time.
