For the purposes of superannuation law, you are considered to have retired when you cease gainful employment. What this actually means can be a bit complicated.
The legislation governing super explains gainful employment as ’employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment.’ This is quite a broad definition, and covers all sorts of activities and all levels of compensation. The key here is that the employment needs to be predicated on receiving monetary reward for the work done.
What is and isn’t gainful employment
Rather than listing all the ways you could be gainfully employed, it is perhaps easier to explain what doesn’t count. Volunteer work, for example, is not counted as gainful employment. Nor does it count if the payment received is in fact only reimbursement for costs incurred. The Australian Tax Office has even confirmed through the courts that paying your spouse a wage for performing normal domestic duties is not classified as domestic work.
Further, the work needs to be conducted for at least 10 hours a week to be classified as gainful employment. Work that takes between 10 and 30 hours a week is classified as part time employment, while working for 30 or more hours per week is classed as full time employment.
Retirement is different depending on your age
The way that gainful employment interacts with the definition of retirement is different based on the age of the individual involved. If you are aged less than 60, then to be retired you need to cease all gainful employment. You also need to satisfy the trustee of the fund that you have no intention of becoming gainfully employed at any point in the future, either full or part time.
Once you are older than 60, the rules are different. Instead of retirement requiring you to cease all gainful employment, you only need to cease one employment arrangement, as long as you do so after reaching 60. This means that if you work two different jobs, after turning 60 you can cease working at one of them and be considered retired for the purposes of superannuation law. This would then grant you access to your super benefits, allowing you to withdraw it at your leisure.
For more about how super works, and to compare super funds, check out our dedicated super page.
Compare superannuation with Canstar
The following table contains details of the superannuation funds rated by Canstar based on someone aged 40-49. This table has been sorted by one-year performance (highest to lowest).
Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product.