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Superannuation and bankruptcy

Bankruptcy will not impact your legitimate superannuation retirement savings provided that:

  • The funds are held in a Regulated Superannuation fund
  • The funds held by your superannuation fund have been saved over time and your superannuation fund has not been used to hide money from your creditors

It is important to note that prior to bankruptcy, and during bankruptcy, your superannuation monies are protected whilst they remain in an approved superannuation fund.

If you are intending to file for bankruptcy, monies should not be withdrawn from your superannuation fund, either due to hardship claim or as a lump sum for retirement. If funds are withdrawn from your superannuation fund prior to bankruptcy, they will form part of your bankrupt estate.

Prior to bankruptcy, monies that you receive from your superannuation fund as a pension payment and are saved in your bank account will be caught by your bankruptcy to the extent that your savings exceed $2,000 at the time that you gain a bankruptcy number.

Once you have the protection of bankruptcy you can save from your pension payments and those savings are not available to your bankrupt estate. RE Gilles: Ex parte Official Trustee in Bankruptcy (1993) 42 FCR 571:115 ALR 631.

During bankruptcy, if you receive a pension from your superannuation fund and your income exceeds the income threshold you will be required to pay income contributions. If this is relevant to you, please refer to our Bankruptcy News item ‘Bankruptcy and Income Contributions’ for details of the after-tax income thresholds that must be exceeded, depending on your number of dependants, before income contributions would be required to be paid. It also demonstrates how income contributions are calculated.

Once you have the protection of bankruptcy, monies you receive from your superannuation fund, either by hardship or retirement, are protected and not available to your bankrupt estate.

Assets purchased with such monies would also be considered to be protected.

For more information call on 1300 060 122 or email

Alan Nicholls - Registered Trustee

Alan Nicholls’ no obligation help desk

Nicholls & Co provide a free, no obligation ‘help desk’ for people considering bankruptcy – we discuss and explain bankruptcy and answer questions for anyone who is considering bankruptcy. The Nicholls & Co help desk can be accessed by phone  
1300 060 122  or . Alan Nicholls, Registered Trustee in Bankruptcy is also available to answer your questions to enable you to decide if bankruptcy is right for you.