The Government has announced several changes to superannuation contribution rules for those over 65. They are designed to give you a few additional years to maximise your superannuation balance.
If the change is introduced as announced, it will be possible for superannuation contributions to be made until you turn 67, even if you are not working (currently most contributions are only allowed after 65 for people who meet a certain minimum level of working hours). There would also be changes to contributions known as “spouse contributions” that allow them to continue until 75 (currently they stop at 70). There was no proposal to change the maximum age at which superannuation contributions are allowed even if an individual is still working (generally shortly after their 75th birthday).
What does this mean?
Currently, once you turn 65 you must meet a work test before any further voluntary contributions can be accepted for you by a super fund.
This opens up a number of opportunities for people who are no longer working but still wish to add to their superannuation:
- up to $25,000 in personal contributions can be claimed as a tax deduction. The proposed change would mean these contributions (and the tax deduction) could continue for an extra two financial years.
- personal contributions that are not claimed as a tax deduction can continue for another two years.
- If you are working a few hours a week (not enough to meet the work test) this change would allow you to continue to have superannuation contributions made by your employer for an extra two years.
What should you do now?
It’s important to remember that this is not new law – it is a Budget announcement which might never actually make it into legislation. If you are close to the crucial age of 65, discuss the changes with your Client Relationship Manager to work out whether there is anything you should do now to “hedge your bets” and get the best possible outcome regardless of what happens with this measure.