Super: Vita Palestrant

As well as top­ping up their sav­ings, a job keeps se­niors phys­i­cally and men­tally ac­tive

Money Magazine Australia - - CON­TENTS - Vita Palestrant Vita Palestrant was edi­tor of the Money sec­tion of The Syd­ney Morn­ing Her­ald and The Age. She has worked on ma­jor news­pa­pers over­seas.

Work­ing be­yond 65, ei­ther part time or as a ca­sual, can be fi­nan­cially ben­e­fi­cial when it comes to boost­ing your super. But to make any con­tri­bu­tions – con­ces­sional or non­con­ces­sional – you need to first sat­isfy cer­tain rules.

“If you want to con­trib­ute to super from the age of 65 to 74, you have to meet the work test. If you can’t meet the work test you can­not put money into super,” says Claire Mackay, an in­de­pen­dent fi­nan­cial plan­ner and owner of Quan­tum Fi­nan­cial, a multi-award-win­ning ad­vi­sory firm.

“You have to be in paid em­ploy­ment and you must work for at least 40 hours over a con­sec­u­tive 30-day pe­riod in the fi­nan­cial year in which you want to make the con­tri­bu­tion. You can meet the work test at any time dur­ing that year but you can­not put money into super un­til you’ve met the work test,” she says.

In terms of su­per­an­nu­a­tion law, work is de­fined as “gain­ful em­ploy­ment”. That means you need to be em­ployed, or self-em­ployed, for fi­nan­cial gain in any pro­fes­sion, busi­ness, trade or oc­cu­pa­tion for which you re­ceive a wage.

Work­ing as a vol­un­teer doesn’t cut it, says Mackay, as there is no fi­nan­cial gain. Sim­i­larly, earn­ings from in­vest­ments such as rent, in­ter­est or div­i­dends don’t qual­ify ei­ther, as it doesn’t in­volve paid work.

The work test has to be met only once in each fi­nan­cial year. Once you’ve sat­is­fied it, you don’t need to be gain­fully em­ployed for the rest of the fi­nan­cial year or meet the work test again each time you make a con­tri­bu­tion. For se­niors who qual­ify, un­der­stand­ing the rules gives them op­tions they would oth­er­wise not have to top up their super from wages, the sale of a prop­erty or an in­her­i­tance.

Con­ces­sional (be­fore-tax) and non-con- ces­sional (af­ter-tax) con­tri­bu­tion caps are be­ing cut from July 1: the for­mer down to $25,000 from $35,000 and the lat­ter down to $100,000 from $180,000. This is where plan­ning ahead has been help­ful.

Once you are 65 or over, you can no longer take ad­van­tage of the bring­for­ward rule, which al­lows you to bring for­ward two years’ worth of non­con­ces­sional con­tri­bu­tions. For the 201617 year some­one un­der 65 could make an af­ter-tax con­tri­bu­tion of $540,000. From July 1 it drops to $300,000.

“If you are 64, you have the abil­ity to pull for­ward ei­ther $540,000, or $300,000 go­ing for­ward, up un­til the day be­fore your 65th birth­day. For those aged 65-74, if you meet the work test you can do the $35,000 (or $25,000), and you can do the $180,000 (or $100,000). But you can’t use the pull-for­ward rule,” says Mackay.

Some of her el­derly clients whose chil­dren are in their early 60s have taken ad­van­tage of the more gen­er­ous non-con­ces­sional con­tri­bu­tion caps and used the rule to bring for­ward their in­her­i­tance.

There’s greater recog­ni­tion now of the ben­e­fits of stay­ing ac­tive – a use-it or lo­seit ef­fect. In a re­cent re­port on the health of the na­tion, the UK gov­ern­ment’s chief med­i­cal of­fi­cer, Sally Davies, says peo­ple should de­lay re­tire­ment or do vol­un­teer work to stay men­tally and phys­i­cally ac­tive. Aus­tralian se­niors com­men­ta­tor Michael O’Neil agrees: “Peo­ple like be­ing ac­tive and pro­duc­tive. They feel it’s phys­i­cally and men­tally bet­ter for them. There’s a greater aware­ness of that now.”

Mackay says some clients con­sult in their old in­dus­try or men­tor younger col­leagues. They might work part time or work three months and then take time off.

“You talk to peo­ple in their 60s and they see them­selves as young and ac­tive. They have a wealth of ex­pe­ri­ence and to say at some ar­bi­trary age some­one is no longer pro­duc­tive is both an in­sult to the in­di­vid­ual but also short-sighted from a com­mu­nity per­spec­tive,” she says.

“We say to clients if you have the de­sire and abil­ity to work, that’s great be­cause that gives us fi­nan­cial op­tions. But it does need to be gen­uine work.”

Peo­ple in their 60s have a wealth of ex­pe­ri­ence”

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