Federal Budget changes to benefit pre-retirees

A series of superannuation-related announcements may give retirees and pre-retirees the ability to boost their super.

Announced the day before the Federal Budget, the government has signalled its intention to help Australians boost their retirement savings by giving them greater flexibility as they near their retirement years.

Changes to the work test

Currently, any Australian aged under 65 can contribute money to their super, whether they are working or not.

Between the ages of 65 and 74 they can only contribute if they meet the work test.

From 1 July 2019, Australians aged 65 – 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test. Read more about that here.

The government has now announced that in addition to the above, from 1 July 2020, Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test. Note that this intention is yet to be legislated.

The government estimates that there are around 55,000 Australians aged 65 and 66 who will benefit from this reform in 2020-21.¹

Increase age limit for spouse contribution

Depending on your spouse’s income, paying money into their super account could enable you to claim a tax offset. Read our summary of how it works. A number of conditions apply and these are outlined in our Personal Contributions Guide.

Currently, your spouse can make contributions to your account until you reach the age of 65. If you are aged 65-69, you must have met the work test before the contribution is made.

The government has announced its intention to increase the age limit for spouse contributions from 69 to 74 years. Again this has not been legislated.

Extend access to bring-forward arrangements

The government has announced that it will also extend access to the bring-forward arrangements, which currently allow those aged less than 65 years to make up to three years’ worth of non-concessional contributions, which are capped at up to $100,000 a year, to their super in a single year. Once this has passed Parliament, this will now be extended to those aged 65 and 66. More details about the non-concessional contributions cap and the current bring-forward arrangements are outlined in our Personal Contributions Guide.

For more information about the 2019/20 Federal Budget announcements, click here.

1 Media release 1 April 2019. ‘Super Boost: More Flexibility for retirement’.