Q: I am 67 and planning to retire at the end of the year. In understand there is a new rule that allows me to continue contributing to super for a while after I retire, even if I am not doing any work. Can you tell me what the details are and how it might help me?
A: Since the start of the new financial year, a work test exemption has applied to people aged 65 to 74 who have recently retired.
The normal rules are that any person under age 65 can make voluntary contributions to their super fund, whether they are working or not.
Between the ages of 65 and 74 people can only contribute if they meet the work test. You must have worked at least 40 hours within 30 consecutive days in a financial year.
After age 75 you cannot make any personal contributions to super, but if you are still working your employer can make superannuation guarantee payments on your behalf.
Under the new work test exemption, anyone aged 65 to 74 with a superannuation balance of less than $300,000 at the previous 30 June will be able to make voluntary contributions to their accumulation account for 12 months from the end of the financial year in which they last met the work test.
The exemption was established to give older people more flexibility to contribute more into super as they move into retirement.
It is important to note that it can only be used in one financial year. Normal concessional and non-concessional contribution caps apply.
Some commentators have argued that the rule may be an opportunity to equalise superannuation balances for a couple, where one partner has a lower balance.
A significant aspect of this change is the interaction of the bring-forward rules and the work test exemption. The bring-forward rule allows a person to bring forward the next two years of non-concessional contributions.
A retiree could trigger the bring-forward rule, allowing them to contribute up to three years of non-concessional contributions (worth $300,000) in the 12-month period of the exemption.