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Medically Retired

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Shady, 13th Jul, 2010.

  1. Shady

    Shady Well-Known Member

    Joined:
    13th Feb, 2009
    Posts:
    52
    Location:
    Sydney NSW
    Hi All,

    Hoping someone might be able to point in the right direction.
    Looking for information on medical retirement < 55yo specifically around paid work once retired. Are there any restrictions, rules/regulations different to someone retiring at 60yo?

    Does the situation change if the fund is a defined benefits scheme (SASS).

    Its not the "how to get medically retired", its the "what happens when your told".
    Oh and its not me either

    Cheers
     
  2. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Shady - are you talking about when someone meets the condition of release requirements for superannuation when they have been diagnosed with a terminal medical condition or permanent incapacity?

    If you are, then that person has full access to any superannuation benefits (same as someone permanently retired 55+ etc) as they have met a 'condition of release'

    This means they are basically in the same position of someone who has retired, meaning they are free to draw lump sums and/or a pension (income stream).

    If they are under age 60 the income will be taxable in their hands, however offsets should apply on the taxable component (15% offset), which means they can still have around $39k in taxable income (made up of the taxable component of their super benefit) without paying any tax.

    The tax-free component of any super benefit will not be taxable.

    All taxpayers also have a low rate threshold of $150k which enables that much to be taken as a taxable lump sum (NOT a pension/income stream) over their lifetime.

    If they are getting paid from a defined benefit scheme, then chances are that they will have an amount which is untaxed - these amounts are taxed differently.

    The person (or their adviser / representative) should contact the defined benefit scheme provider for details in regards to the ability to draw amounts out and how it will be taxed.

    I hope this is helpful

    SM
     
  3. Shady

    Shady Well-Known Member

    Joined:
    13th Feb, 2009
    Posts:
    52
    Location:
    Sydney NSW
    Thanks for the info SM,

    My FIL has been told that he will be medically retired as soon as his sick leave runs out in about 8 months. He has been in the SASS (state government defined benefits scheme) for many years and has accumulated the maximum 180 points. He is 53 and although he will no longer be able to perform his duties I'm sure that he will be able to work in some capacity for someone but his fear is that he wont be allowed when he is medically retired.

    I have already strongly suggested he see an adviser but wanted to do a bit of searching on my own.

    Thanks again