Changes to the super work test

Chandra wants to know how the upcoming changes to the super work test will operate.


Q. Chandra
During last year’s federal election, the coalition government promised some changes to superannuation if they were re-elected. The proposed change was that the ‘work test’ will be required after attaining 67 years, as this is supposed to be the new Age Pension limit. Hence those still under 67 as at 1 July 2020 will no longer need evidence of 40 hours’ work within 30 consecutive days. A useless test in my opinion as we all spend many more hours in voluntary work for the causes we believe in, which our government does seem to recognise. We do this because we believe in the cause, not because we get NCC benefit! Politicians rarely get this right.

I wonder if you have any further information/clarity on whether those people who have not reached 67 as at 1 July 2020 will be able to add up to $100k or $300k as bring forward contributions within this financial year. This is an important consideration for those who believe in fully self-funded retirement and have the resources to do so (as long as they don’t exceed $1.6m cap!).

A. As you pointed out, the government announced before last year’s budget that what is known as the ‘work test’ in superannuation will no longer apply between the ages of 65 and 67.

It allows that age group to make tax-advantaged and non-concessional contributions to superannuation without proving to the taxman that they have worked 40 hours in the past 30 days.

Before the move, which is scheduled to start from 1 July 2020, once you hit 65 you couldn’t make super contributions without proving you were still working.

If you were under that age, you could still make super contributions, but you could not draw down your super unless you quit work.

The change allows 65 and 66-year-olds to make contributions without working, while also being able to withdraw money.

The changes could help people who have limited super build balances in their later years if they somehow come into some cash.

According to Industry Super chief executive Matthew Linden, the changes will allow a wealthy couple to boost their super funds by $500,000 between 65 and 67.

That is because they can each put in two years’ worth of non-concessional contributions totalling $200,000 each and a further two years of concessional contributions worth $50,000 each.

However, the changes preclude adding any contributions to this scheme for the current financial year, as they won’t come into effect until the next financial year.

Do you have question regarding the Age Pension or other Centrelink benefits?

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Ben Hocking
Ben Hocking
Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.
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