Can you salary sacrifice into super and claim the pension?

Lurelle is approaching pension age and wants to know about the pension while working.

Can you salary sacrifice into super and claim the pension?

Lurelle is approaching pension age and wants to know about the pension while working.

•••

Q. Lurelle
I am approaching pension age. I am still working permanent part time and I currently salary sacrifice $200 per fortnight into my superannuation. My question is: would I be able to receive the full amount (or partial amount) of aged pension while continuing to work, albeit less hours, and sacrifice the $200 per fortnight to build up my super account?

A. There are age-related conditions under which your super fund can accept contributions.

But before we get to those, it is unlikely that contributions salary sacrificed into your superannuation would continue to be of benefit if you reduced your hours to the point where you were still able to claim the Age Pension.

According to moneysmart.gov.au, making extra concessional contributions to superannuation is only tax effective if you earn more than $37,000 per year. However, you may want to consult a financial adviser to confirm your exact situation.

Going back to the official rules about contributions that are allowed, if you are 67 to 74 years of age you will still need to meet the work test or satisfy the work test exemption criteria in order to make a contribution to your superannuation and claim a tax deduction.

To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period each income year in order for your fund to accept a personal super contribution for which you can claim a deduction.

To meet the work test exemption criteria, you must have:

  • satisfied the work test in the income year preceding the year in which you made the contribution
  • a total super balance of less than $300,000 at the end of the previous income year
  • not relied on the work test exemption in a previous financial year.
     

Do you understand the rules about contributing to super after you have reached retirement age? Are they too complicated?

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    sunnyOz
    14th Sep 2020
    11:32am
    I am just over age 67, and no longer able to work. But I would very much like to add to my super - but am not permitted to. Instead I have to take some out (have now reduced this from the mandatory 5% down to 2.5%). I am well under the allowable threshold - why are we discriminated against from doing this? If I had a casual job - then yes, I would be allowed.
    mogo51
    14th Sep 2020
    2:06pm
    That's a good question SunntOz. I can't 7nderstand why we not allowed either.
    Mariner
    14th Sep 2020
    3:41pm
    Why would you worry about all that at age 67? I am a few years older and I find I am using less money than at age 67; maybe I am lucky with not many medical expenses but I still manage to pay private health premiums for the two of us. Spend some money and do not worry about accumulating more.
    Monkey
    14th Sep 2020
    11:50am
    I was of the understanding that cut off age to contribute to my super was 65 unless I met the work test . Is this still the case .? Your article says contributing to super is until 67yrs , which is correct?
    McDaddy
    14th Sep 2020
    1:02pm
    The article is correct, from 1/07/2020 it changed to allow people aged 65 and 66 to contribute to Super without having to satisfy the work test, which now kicks in at age 67.
    Monkey
    14th Sep 2020
    5:07pm
    Thankyou McDaddy . Where can i find this new ruling . I was advised by my super fund that i should have acted before 65 years old.
    McDaddy
    15th Sep 2020
    10:32am
    I would be worried if your Super fund don't know this, https://www.ampcapital.com/au/en/insights-hub/articles/2020/june/a-new-financial-year-with-some-new-super-rules
    McDaddy
    15th Sep 2020
    10:32am
    I would be worried if your Super fund don't know this, https://www.ampcapital.com/au/en/insights-hub/articles/2020/june/a-new-financial-year-with-some-new-super-rules


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