From 1 July 2020, new super changes have come into effect, with one still to be legislated, that may offer older Australians more opportunities to grow their retirement savings. These three changes include:
- Removal of work test requirements to age 67
- Extension of bring-forward arrangements (still to be legislated)
- Increased age limit to receive spouse contributions
Removal of work test requirements to age 67
Australians who are aged 65 and 66 can now make voluntary concessional and non-concessional contributions into their super without having to meet the requirements of the work test. Prior to this change, only those aged 64 or below did not have to undergo the work test. This means that Australians aged 65 and 66 can now make super contributions without having to be gainfully employed for 40 hours in 30 consecutive days, during the financial year in which they make their contributions.
This change may enable Australians nearing retirement, or recently retired, an opportunity to improve their super savings regardless of their working arrangements.
Extension of bring-forward arrangements
New legislation is expected to come into law which will allow Australians aged 65 and 66 to use the existing bring-forward rules for non-concessional (after-tax) contributions. Similar to the removal of the work test requirements above, this change expands on the current rule which only applies to those aged 64 or below.
If legislated, this change will mean that individuals aged under 67 can make up to three years of non-concessional contributions in a single financial year, even if they’re not working. For example, they can contribute up to $300,000 in the 2020/21 financial year, with no further non-concessional contributions for the following two years.
Under these proposed changes, a retiree couple aged 65 or 66 selling their home may also be able to contribute over a $1million from the sale proceeds using a combination of pre- and post-tax contributions and downsizer contributions. Without this change, they may only be able to contribute $600,000.
Increased age limit to receive spouse contributions
The Australian Government has also confirmed changes to lift the maximum age for spouse super contributions. These changes will allow people up to age 75 to receive spouse contributions, which is up from the previous age limit of 69 years. This means that individuals aged 70 – 75 years can now receive contributions made by another person on their behalf. However, receiving spouses aged between 67 and 75 years will still need to meet the requirements of the work test.
Get in touch with us today to learn how you can maximise your super contributions and save more for retirement.
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