Work Test Retires for Older Australians
Thursday, March 17, 2022
From July 1st, if you are between 67-74 years can now add money to your superannation without meeting a work test and thereby increase your retirement income savings.
The elimination of the work test for 67-74 year olds was announced in last year’s (2021) Federal Budget.
From 1st July this year, this age group will no longer be required to work a minimum number of hours (previously 40 hours over 30 consecutive days) to make non-concessional or salary sacrificed contributions into Super. This is a bonus for these Australians who previously were excluded from topping up their super. It is aimed at providing over 66 year olds, including self-funded retirees, the chance to contribute to their superannuation and receive the benefits such as lower tax rates or tax free income streams once in an Allocated Pension.
The Government are aware that people in the 65+ retiree age bracket did not have the benefits of compulsory employer superannuation during their earlier working career, as that system only kicked off in 1992. This has left older Australians disadvantaged in terms of having established funds in their superannuation nest egg via their employment situation.
You may have read in our previous article about loosening of the superannuation rules back in 2018-19 whereby the Federal Government offered a ‘work test exemption’ for 65-74 year olds. This meant they were permitted to make voluntary contributions for up to 12 months after a financial year in which they met the work test, as long as their superannuation balance was under $300,000.
This removal of the work test altogether, means this group no longer need to meet any work test at all. In addition they are allowed to access the ‘non-concessional bring forward’ arrangement. This permits $110,000 per year of non-concessional contributions to be added to their super, or $330,000 over a rolling 3 year period. It means if you receive income from property sales, inheritance or financial wins, you may be able to add some or all of this to your superannuation. You will need to discuss your personal situation with your financial adviser to establish your eligibility based on your previous superannuation contributions. Note: The existing $1.7 million cap on lifetime superannuation contributions will continue to apply.
In addition to all this for over 65’s, there is also the option for the $300,000 downsizer contribution for those people who sell their home and wish to contribute some of the proceeds to their superannuation.
So the superannuation options for older Australians have now broadened. If you find yourself in the position of having funds to add to your superannuation we recommend having a discussion with your Financial Adviser OR please contact our retirement investment specialists at Maher Digby Securities, Nambour.
For more Information contact Mark Digby at Maher Digby Securities Pty Ltd - Financial Advisers – AFSL No. 230559. This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor