You typically pay 15% tax on your super contributions, and your withdrawals are tax-free if you're 60 or older. The investment earnings on your super are also only taxed at 15%.
Before you turn 60, pension payments are taxed at your marginal tax rate less a 15% tax offset. When you turn 60, your pension payments (or any lump sum withdrawals) are usually tax free.
Pension payments are tax-free after age 60: Any super benefits, either pension or lump sum, paid to you after age 60 are tax-free.
Superannuation Guarantee (SG)
If you are aged over 60, your employer must still pay SG contributions on your behalf into your super account. The SG contribution rate is currently legislated to rise incrementally to 12% in July 2025. Learn about SG contribution rates.
Adding to super before tax
You can contribute up to $27,500 each year. These are contributions you have not paid any personal income tax on. They are called 'concessional contributions' because the concessional rate of tax paid on super is 15%.
There are absolutely no restrictions to accessing your Super Benefit when aged between 60 and 64 after you are retired. There are two ways you can access your Super; either as a lump-sum payment or as a pension.
You can access your super as long as you've permanently retired. If you end an employment arrangement on or after age 60, you can also access the super you've earned up until then. If you're not ready to retire, you could use some of your super while you're still working, with a Transition to Retirement Income account.
Individuals aged between 67 and 74 who have recently retired, may be eligible to make additional voluntary contributions to super where they meet certain eligibility criteria around their previous year of work and their total super balance.
Making personal super contributions. Once you reach age 75, you are ineligible to make further non-concessional personal contributions into your super account, regardless of your work status.
Best Age To Retire for Tax Purposes Super
The best age to retire for tax purposes in Australia when it comes to superannuation is age 60. Generally, all withdrawals over age 60 from superannuation are received completely tax free. The only exception is if your balance includes a taxable (untaxed) element.
In such an instance, there is no restriction on how much of your super you can access. However, you should be mindful of any lump sum withdrawal tax, as explained below. There are some instances, depending on your employment history, where part of your super balance includes unrestricted non-preserved components.
After-tax contributions are only taxed if you go over the non-concessional contributions cap. Extra taxes apply to any amounts over the cap, unless you withdraw them and 85% of the earnings attached to them. The non-concessional contributions cap is $110,000 from 1 July 2021.
If you withdraw money from your super fund, you must tell Centrelink within 14 days.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
There are annual caps (or limits) on the amount of non-concessional contributions you can make into your super account. This annual cap increases in line with indexation of the concessional (before-tax) contributions cap. The general annual cap for non-concessional contributions for 2023–24 is $110,000.
The Bottom Line. For some, a lump-sum pension payment makes sense. For others, having less to upfront capital is better. In either case, pension payments should be used responsibility with the mindset of having these resources support you throughout your retirement.
Any contributions you make to your super fund from your after-tax income are called non-concessional contributions. The annual non-concessional contributions cap for the 2023–24 financial year is $110,000.
How much can I contribute? The maximum you can contribute is $300,000 or the sale price of your home, whichever is less. You may make more than one contribution, but the total must not exceed this maximum. You may contribute less than the maximum.
You may be able to take your superannuation as a lump sum payment when you retire. This is usually tax-free from age 60.
The minimum amount that can be withdrawn is $1,000 and the maximum amount is $10,000. If your super balance is less than $1,000 you can withdraw up to your remaining balance after tax. You can only make one withdrawal in any 12-month period.
Taking money out of superannuation doesn't affect payments from us. But what you do with the money may. For instance we'll count it in your income and assets tests if you either: use it to buy an income stream.