Before a 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 comes into effect. If a member turned 55 before 1 July 2015, they qualified for a TRIS and the change in preservation age won't affect them. However, this age is now based on the member's date of birth.
A member who turns 55 between July 1 2015 and 30 June 2016 cannot start a TRIS during the 2015-16 financial year. If born between 1 July 1960 and 30 June 1961 the earliest you can elect to start a TRIS is during the 2016-17 financial year.
The preservation age continues to rise until it reaches 60. For members born from 1 July 1960 to 30 June 1961 the age is 56. If born between:
- 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 2022-23.
The preservation age will be 60 for those born after 30 June 1964 and a TRIS can start from the 2024-25 year and onwards.
This is a significant change and it is important for SMSF trustees to be aware of the age at which super can be accessed so they don’t accidentally pay benefits to a member who is not eligible.
Trustees may face penalties if the payment rules are breached.