Exempting superannuation investments 108-05070030

Superannuation investments are normally assessed under the income and assets tests for customers of Age Pension age. Most funds allow customers to access their investment, even if they are still employed.

Exception: some super funds restrict access to these investments until the person stops work for that employer or exits the scheme. These are mainly super funds catering for government employees under a defined benefit scheme.

Testing eligibility for exemption

Any customer who is over Age Pension age and claims to be unable to access their superannuation regardless of their employment status, may submit an application for an exemption to be considered. . Generally, there are no restrictions on access to preserved benefits when a member reaches age 65.

Ask the customer to provide the most recent statement and fund rules outlining the reasons preventing accessibility from their superannuation fund.

In all cases, make a referral for the customer to speak to a Financial Information Service (FIS) Officer.

The FIS Officer will help people through the superannuation exemption application process:

• by explaining how the various superannuation products affect government payments
• as the contact person for superannuation exemption enquiries
• by reviewing applications and completing the FIS Officer checklist for superannuation investment exemption requests

Generally, preserved benefits must be retained in:

• a superannuation fund
• an approved deposit fund, or
• a retirement savings account

This is until the member meets a condition of release with no cashing restrictions under the Superannuation Industry (Supervision) Act 1993.

Preserved benefits are commonly paid when a member has reached their preservation age and retired. Since 1 July 2005, a member who has reached their preservation age can access their preserved benefits while still working. The member is restricted to taking a non-commutable complying income stream or a non-commutable account-based income stream. These are known as transition to retirement income streams.

If a member has not reached their preservation age but has permanently retired, a benefit can only be paid:

• if the permanently disabled member is in severe financial hardship
• for compassionate reasons, or
• on death of the member

The earliest possible DOE is the date the customer enquired or applied.

In some cases, the date of application is the earliest date recorded that the customer spoke to Centrelink about their exemption. This could be before they submitted the application if there is a record of their enquiry about the exemption.

The Minister for Social Services has the delegation to exempt superannuation investments if they are inaccessible. However, the Minister has delegated this authority to Services Australia.

The DOE of an exemption and rejection of an application for exemption are not appealable decisions as they are Ministerial determinations. However, if more information is provided following a rejection, another application for exemption may be submitted.

An exemption exists for as long as the circumstances of the investment make it inaccessible. If it appears the exemption decision was not applied correctly, it can be resubmitted for further consideration.

A superannuation exemption is only for a limited period. It stops when the conditions under which it was granted are no longer met. These conditions are included in the determination advice and the letter sent to the customer.