You may have wondered what Preservation components mean on your members statement? The main terms that you will find on your statement are, preserved benefits (PBs), restricted non-preserved benefits (RNPBs) or unrestricted non-preserved benefits (UNPBs).
Since 1999, all contributions and any earnings inside of your SMSF will be considered “preserved”. That is, they are locked inside of Superannuation for the member until they meet a “condition of release” (meaning: a legitimate reason to draw down on your Super).
By way of example, if your total member balance is $500,000 and your preserved amount is $500,000, that means that you do not have the ability to take any money out of your Super until you have met a condition of release.
Restricted Non Preserved benefits are those that relate to your Superannuation contributions prior to July 1999 when the rules for accessing superannuation changed. We won’t address this component in this article, suffice to say that any amounts in this component are unlikely to grow or change if indeed you have any at all.
The last component is Unrestricted non preserved benefits. This component is the best one by far. Once you have met a full condition of release, then you have full and unfettered access to your Super, which means you are allowed to withdraw your benefits. You can have all of your members balance in this component even if you do not commence a pension. The amount should be moved into UNPB component regardless of your pension status. You can have 100% UNPB’s whilst being in accumulation phase.
Once a full condition of release happens, you can access this money as a lump sum without starting a pension. There are tax free lump sum lifetime limits that can be withdrawn without starting a pension or regular payments- regardless of your age. But you have to remember that you have to have met a condition of release to do so. Just a reminder that any amounts withdrawn from your Super do not need to be declared as income if you withdraw that amount after you have reached the age of 60.
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