04 June 2019
When you access your super at retirement your super fund may ask you 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) the most common reasons retirees return to full or part-time employment are financial necessity and boredom1. Regardless of your reason for returning to work, there are certain rules you should be aware of.
What are the superannuation retirement rules?
You generally will only be able to access your super if you’ve reached your preservation age and retired, ceased an employment arrangement after age 60, or turned 65. If you’re thinking about returning to work after retirement there are rules about super you may need to be aware of depending on your circumstances.
We look at some of the common situations below.
I have reached my preservation age but am less than age 60
If you’ve reached your preservation age and wish to access your super, 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 return to the workforce, however your intention to retire must have been genuine at the time, which 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 in the other. You can choose to access your super as a lump sum or in periodic payments (which you may receive via an account-based pension).
If you’re in this situation, 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?
Regardless of which of the groups above you fall into, if you have begun drawing a regular income stream from your super savings, you can continue to access your income stream payments whether you return to full or part-time employment.
If you haven’t actually accessed your super but have met one of the retirement conditions of release (and advised your fund of this) then 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’ 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, but 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 and/or voluntary contributions you make yourself.
However, if you’re aged 65 or over, and intend on making voluntary contributions, you must first satisfy a work test requirement showing that you have worked for at least 40 hours within a 30-day period before you are eligible to make voluntary contributions in a financial year. Voluntary contributions can’t be made once you turn 75 and 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, you’d know that Centrelink applies an income test and 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.
Where to go for assistance
For information and tips around re-entering the workforce, check out the Department of Employment website. It includes details about the government’s jobactive service and the New Enterprise Incentive Scheme for those looking to become self-employed.
There are also websites like Older Workers and BeNext, which focus specifically on mature-age candidates, if you’re looking for job opportunities.
If you have further questions about how a return to work could impact your ability to access your super, speak to your financial adviser. And, if you don’t have one but would like some advice on the matter, contact AMP on 131 267, or use our find an adviser search function.