Preservation Age – In a major policy shift, the federal government has confirmed that the preservation age—the earliest age Australians can access their superannuation savings—will be raised to 70 years, effective from June 1, 2025. Alongside this change, a new Retirement Bonus Scheme has also been announced to cushion the impact and provide incentives for older Australians who choose to remain in the workforce longer. These changes are designed to address the economic pressures of an ageing population and ensure long-term sustainability of the superannuation system.
What Is the Preservation Age and What’s Changing in 2025?
The preservation age is the minimum age at which individuals can access their superannuation savings, provided they have retired or met a condition of release. Currently, the preservation age varies between 55 and 60 depending on one’s birth year.
Key Changes Effective June 2025:
- New preservation age: 70 years for all individuals
- Applies to: Anyone born on or after July 1, 1965
- Transition period: From June to December 2025
- Exemptions: Individuals who meet compassionate grounds or severe financial hardship conditions
Reasons for the Change:
- Increased life expectancy
- Rising public health and pension costs
- Encouragement of financial independence in retirement
Retirement Bonus Scheme – A New Incentive for Working Longer
To offset the delay in superannuation access, the government has launched a Retirement Bonus Scheme, designed to reward older workers who continue in the workforce past age 67.
Bonus Scheme Highlights:
- Annual cash bonus of up to $3,000
- Eligibility for workers aged 67 to 75
- Must be employed at least 20 hours per week
- Paid as a tax-free lump sum directly into superannuation
- Cumulative bonus possible up to $21,000 over seven years
Detailed Comparison Table: Old vs New Preservation Age Policy
| Feature | Before June 2025 | After June 2025 |
|---|---|---|
| Minimum Access Age | 55–60 (based on birth year) | 70 (fixed for all) |
| Applies To | All superannuation members | All born after July 1, 1965 |
| Condition of Release | Retirement or special conditions | Retirement or special conditions |
| Access via Transition to Retirement | Yes | No |
| Bonus Scheme Available | No | Yes, for working seniors |
| Tax Implications on Withdrawal | Standard rates | No change |
| Indexation Policy | Based on CPI | Reviewed every 5 years |
| Penalties for Early Withdrawal | Yes | Yes |
Eligibility Criteria for the Retirement Bonus Scheme
To qualify for the Retirement Bonus Scheme, retirees must meet the following conditions:
- Be between 67 and 75 years of age
- Work a minimum of 20 hours per week
- Submit annual proof of employment and earnings
- Be a resident of Australia
- Not be receiving a Disability Support Pension
- Hold an active superannuation account
- Comply with all ATO and Centrelink reporting requirements
Bonus Payment Breakdown by Year
| Year of Eligibility | Minimum Work Hours | Bonus Amount | Payment Method | Tax Status |
|---|---|---|---|---|
| 2025 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2026 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2027 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2028 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2029 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2030 | 20/week | $3,000 | Paid into super | Tax-Free |
| 2031 | 20/week | $3,000 | Paid into super | Tax-Free |
How Will This Impact Superannuation Planning?
Raising the preservation age will have significant implications for retirement planning:
- Longer savings period: Workers will have more years to contribute to their super.
- Delayed withdrawals: Superannuation will be preserved for a longer retirement phase.
- Shift in financial advice: Advisors will need to adjust strategies for clients nearing retirement.
- Increased reliance on Age Pension for those unable to continue working.
FAQs on Preservation Age
Q1: Who is affected by the new preservation age?
A: All Australians born on or after July 1, 1965.
Q2: Can I still access my super early under hardship?
A: Yes, the current compassionate and financial hardship provisions remain unchanged.
Q3: Is the retirement bonus automatic?
A: No. Eligible individuals must apply each year and submit employment verification.
Q4: Will this affect Centrelink payments?
A: It may. Individuals are advised to check how the bonus affects their income test for Age Pension.
Q5: Will this lead to higher super balances?
A: Yes, due to extended contribution years and delayed access.
Departmental Contact Details for Clarification
If you have any questions or need assistance, please contact the following official channels:
- Department of Social Services
Phone: 1800 634 035
Website: www.dss.gov.au - Australian Taxation Office (ATO)
Superannuation Helpline: 13 10 20
Website: www.ato.gov.au/super - Services Australia (Centrelink)
Retirement Services: 13 23 00
Website: www.servicesaustralia.gov.au
Conclusion of Preservation Age
The shift to a preservation age of 70 years from June 2025 marks a pivotal change in Australia’s retirement framework. While it may require Australians to stay in the workforce longer, the introduction of the Retirement Bonus Scheme offers a positive incentive for doing so. It is now more crucial than ever for Australians to seek professional retirement planning advice and stay informed through official updates to secure a financially stable and well-prepared retirement.
