Work test to be deferred to age 67
The Government is proposing that, from 1 July 2020, members aged 65 and 66 can make voluntary super contributions (both before and after-tax contributions) without having to meet the work test.
Currently, the work test applies from age 65. To meet the work test, you must be gainfully employed for at least 40 hours in a 30-day period. Remember, from 1 July 2019, members aged between 65 and 74 who have a total superannuation balance below $300,000 may be exempt from the work test, if they’re in their first year of retirement.
This new proposal will provide those who are approaching retirement and still working casually or part time, or volunteering, with more flexibility to make extra contributions.
Extending access to the 'bring-forward rule'
The ‘bring-forward rule’ allows members to make up to three years’ worth of after-tax contributions in a single financial year. This means you could currently make after-tax contributions of up to $300,000 in one year.
Presently, this arrangement is only available to members who were aged 64 or younger at any time in the financial year.
The Government has proposed to extend access to the bring-forward rule for members aged 65 and 66, effective from 1 July 2020.
This could be beneficial to those aged 65 or 66 who would like to boost their super balance as they near retirement.
Increasing age limit for spouse contributions
If you’re married or in a de facto relationship, currently you can only provide super contributions to your partner’s account if they are 69 or younger.
The Government has proposed to increase the age limit for these spouse contributions to age 74, from 1 July 2020.
This proposal may be beneficial for couples who wish to equalise their superannuation balances, to maximise each other’s use of a tax-effective pension within the transfer balance cap. The current transfer balance cap is $1.6 million.
Opt-in insurance for under 25s and members with low balances
The Government is proposing that, from 1 October 2019, insurance automatically provided in super will be switched off for any member who has had a balance of less than $6,000 since 1 July 2019, unless the member chooses to maintain their insurance.
Additionally, from 1 October 2019, new members will not be provided with automatic insurance until they are 25 years old and have a balance of $6,000. However, these members can opt in earlier for insurance if they wish.
related to that budget measure did not include these proposals.
Members who do not have automatic cover can apply.
The Government announced similar measures in the 2018-19 Federal Budget. However, the final legislation related to that budget measure did not include these proposals.
Will the contribution caps still apply if I’m exempt from the work test?
Who can make use of the ‘bring-forward rule’?
How much can I contribute to my spouse’s super in a year?
What’s the transfer balance cap?
How can I choose to maintain my insurance cover with rest?