Do you know the rules about returning to work after you’ve accessed your super?
Upon accessing your superannuation, you may need to sign a declaration stating that you intend to never be employed again. But there may be compelling reasons why someone would subsequently return to work.
According to the Australian Bureau of Statistics (ABS) retirees often return to full or part-time employment due to financial necessity and boredom.
Regardless of your reason for returning to work, there are certain rules you should be aware of.
What are the superannuation retirement rules?
Generally, you will only be able to access your super for certain reasons.
- Reached your preservation age or are retired
- Ceased an employment arrangement after age 60
- You have or turned 65.
If you’re thinking about returning to work after you’ve accessed your super, there are rules about super you should be aware of.
Here are some of the common situations below.
I have reached my preservation age but am less than age 60
You would usually be required to declare that you’re no longer in paid employment and have permanently retired.
If your personal circumstances have since changed, it is possible for you to returning to work after you’ve accessed your super. However, your intention to retire must have been genuine at the time.
This is why your super fund may have asked you to sign a declaration previously stating your intent.
I ceased an employment arrangement after age 60
From age 60, you can cease an employment arrangement and don’t have to make any declaration about your future employment intentions.
If you happen to be working more than one job, ceasing just one will meet the requirement and you can continue working.
You can choose to access your super as a lump sum or in periodic payments.
You can return to work whenever you like as you wouldn’t have needed to declare permanent retirement before accessing your super.
I’m 65 or older
When you turn 65, you don’t have to be retired or satisfy any special conditions to get full access to your super savings.
This means you can continue working or return to work if you have previously retired.
What happens to your super if you return to work?
If you have begun drawing a regular income stream from your super savings, you can continue to access your income stream payments. This is the case whether you return to full or part-time employment.
If you haven’t accessed your super but have met one of the retirement conditions of release (and advised your fund of this). Your super will generally remain accessible if you return to work.
Meanwhile, it’s important to note that any subsequent super contributions made after you return to work will generally be ‘preserved.’ That is – until you meet another condition of release (unless you are aged 65 or over).
Can I access my super at 55 and still work?
In the past, Australians could access their super from as young as 55. However, the preservation age is gradually increasing to age 60. And only people born before 1 July 1960 reached their preservation age at 55.
Regardless of your preservation age, you must meet certain criteria before you can access your super, as outlined above.
However, if you’re age 60 or over, these criteria simply mean you need to end an arrangement under which you’re gainfully employed.
Rules around future super contributions
Your employer is broadly required to make super contributions to a fund on your behalf at the rate of 9.5% of your earnings. (Once you earn more than $450 in a calendar month.)
This means you can continue to build your retirement savings via compulsory contributions paid by your employer. You can also make voluntary contributions yourself.
However, if you’re aged 65 or over, and intend on making voluntary contributions, you need to satisfy a work test requirement. This is to prove you have worked for at least 40 hours within a 30-day period before you’re eligible to make voluntary contributions.
Voluntary contributions can’t be made once you turn 75. The last opportunity is 28 days after the end of the month where you turn age 75.
Effects of withdrawing super on your age pension
If you’re receiving a full or part age pension, Centrelink applies an income test. It also applies an assets test to determine what you get paid.
Your super or pension account will be included as part of your age pension eligibility assessment.
Any employment income will also be taken into account as part of this assessment. So make sure you’re aware of whether your earnings could impact your age pension entitlements.
For those eligible for the Work Bonus scheme, Centrelink will apply a discount to the amount of employment income otherwise assessed.
For more advice about how you can structure your superannuation, contact our team. We can help make sure one of your most important assets is protected.
Source: AMP, 2019