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You can make a lump sum withdrawal from your Post- Retirement Income Account at any time.

Other than unrestricted non-preserved components, withdrawals from Pre-Retirement Income Accounts can only be made if you meet one of the following conditions:

  • You are at least 60 years of age and have ceased employment since attaining age 60
  • You have reached preservation age, ceased employment and permanently retired from the workforce
  • You have become permanently incapacitated or suffered a terminal illness

If you have met one of these conditions, your Income Account will be transferred to a Post-Retirement Income Account before any requested withdrawal is paid.

Understand any tax implications

Lump sum withdrawals from your Income account (also referred to as ‘commutations’) are not included as part of your regular income payments and different tax requirements may apply. Withdrawal payments are taxed as super lump sum payments.

If you are age 60 or over, then any withdrawals from your Income account are tax free.

If you are under age 60, these payments are generally divided into tax-free and taxable components and are taxed according to your age as shown in the table below. The tax-free and taxable components are calculated using complex rules, but in general, the components depend on the source of the original contribution.

You are… Your taxable component is… Your tax-free component is…
Less than preservation age Taxed at 20% (plus Medicare levy) Tax-free
Preservation age to age 59 The first $225,000 (2021/22)* is tax free. You pay tax at 15% on the balance (plus Medicare levy) Tax-free
Age 60 and over Tax-free Tax-free

*This cap is indexed, but only when indexation produces an increase of $5,000 or more.

Note:

  • The tax rates shown in the table above assume you have supplied your Tax File Number (TFN) and that there is no untaxed element of your benefit in the Fund
  • When withdrawing a lump sum from your Post-Retirement Income Account, the amount withdrawn will need to be paid in proportion to your taxable and tax-free components
  • The percentages determining your proportional component drawdowns do not change throughout the duration of your Income Account

Payment options

Your withdrawal can be paid directly to your nominated bank account used for your regular payments.

Alternatively you can arrange to have the payment transferred back to your existing Super Account within Mercy Super or another fund. This is common practice when you want to combine your Income Account benefits with other benefits within your Super Account, to then establish a new Income Account with the consolidated balance.

You can choose to have your total Income Account balance paid or a partial payment by nominating a dollar amount.

TIP: If your payment leaves you with an Income Account balance of less than $2,000 we may close your Income Account and pay the remaining funds directly into your nominated bank account.

Supplying your Tax File Number (TFN)

Your TFN helps us to manage your Income Account in the most tax-efficient manner.

If you are under age 60, you would have completed a Tax File Number declaration when you activate an Income Account. The information on this form is used to work out how much tax should be deducted from your payments.

There are strict laws about how we can use your TFN, particularly around when we can share your TFN with other parties. Where required, we’ll provide your TFN to the Trustee of another super fund or account to which your benefits are transferred in the future, unless you tell the Trustee in writing not to do so.

It is not an offence to withhold your TFN from us. However, if you’re under age 60 and didn’t give us your TFN, you may have to pay more tax on your benefits than you normally would. To avoid this, please ensure we have your TFN.

It is unlikely you would have established an Income account if we didn’t first have your TFN. However, if you are uncertain as to whether or not you have provided your TFN, you can check these details by logging onto your account through Member Online or contacting us on 1300 368 891.

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