Once your 65th birthday rolls around, many people are keen to put their feet up and enjoy a well-earned rest. When they think about their super, it’s usually more about how to wisely spend their retirement nest egg than how to add to it.
But just because you have hit 65 it doesn’t mean you shouldn’t consider making super contributions. With Australians living longer than ever in retirement, many people are concerned they won’t have enough for a comfortable retirement.
And if you plan on still working after age 65, adding to your super account balance isn’t that hard.
Contributing to super after 65: Can you do it?
The short answer to this is yes, but the rules for making contributions into your super account can be a little confusing.
If you are aged 65 or over, compulsory employer contributions like SG contributions can be made directly into your super account. When it comes to voluntary contributions like salary sacrifice arrangements and personal non-concessional (after-tax) contributions, however, you need to satisfy a Work Test before your super fund will accept a contribution.
Once you hit age 75, your super fund will generally be unable to accept further contributions into your super account.
What are the caps for super contributions after 65?
Whatever your age, the concessional (before-tax) contributions cap is $25,000 each year (2018/2019).
If you are aged under 65, the non-concessional (after-tax) contributions cap is $100,000 a year (2018/2019), with up to three years of annual caps ($300,000) available if you choose to use the Bring-forward rules.
Once you reach age 65, however, your non-concessional (after-tax) contributions cap is a flat $100,000 a year, as the Bring-forward arrangements are generally not available to people aged 65 and over.
Also, once you reach age 65, you can only make a non-concessional (after-tax) contribution if you satisfy a Work Test in the financial year in which the contribution is made. (For more information about Bring-forward arrangements, see SuperGuide article A super guide to understanding the bring-forward rule.)
Note: From 1 July 2019, the new one-year Superannuation Work Test Exemption can be used in the financial year you turn 65 to access the Bring-forward arrangements for non-concessional (after-tax) contributions provided your Total Super Balance is under $300,000 (see below).
What is the super contributions work test?
Currently if you have reached age 65, but are not yet aged 75, you must be ‘gainfully employed’ at least 40 hours within 30 consecutive days in a financial year before your super fund can accept contributions into your super account.
These rules are known as the work test for super contributions and it is essential to comply with them if you plan to continue making contributions into your super account past the age of 65.
Important note: From 1 July 2019 these rules will be modified, as the government has introduced a one-year exemption from the work test for people with a Total Super Balance below $300,000. This is to allow recent retirees to better prepare for retirement by boosting their super account balance if they are aged 65 to 74.
The one-year exemption from the Work Test covers both concessional and non-concessional contributions. The normal annual caps for both types of contributions still apply.
For more information about the work test and the Superannuation Work Test Exemption see SuperGuide article Work test: Making super contributions over 65.
Age restrictions on your super fund accepting your contributions
This table summarises whether or not your super fund can accept different types of super contributions at various ages:
|Age at time of contribution||Type of super contribution|
|SG||Award or industrial agreement||Salary sacrifice||Personal (non-concessional)||Spouse||Downsizer|
|64 years old or under||Yes||Yes||Yes||Yes||Yes||No|
|65 to 69 years old||Yes||Yes||Yes*||Yes*||Yes*||Yes|
|70 to 74 years old||Yes||Yes||Yes*||Yes*||No||Yes|
|75 years old or over||Yes||Yes||No||No||No||Yes|
*To qualify, you must meet the requirements of the work test during the same financial year in which the contributions are made.
Note: Your employer is not required to make SG contributions if you are aged 75 or over.
Over 75? Making personal super contributions
Once you reach age 75, you cannot make non-concessional (after-tax) personal contributions, even if you satisfy the Work Test.
There is one exception to this rule. If you are turning 75 during a financial year, you can make a non-concessional contribution on or before the day that is 28 days after the end of the month in which you turn 75. However, you still need to pass the Work Test and your Total Super Balance must not exceed $1.6 million.
Kyle is turning 75 during the 2018/2019 financial year and he would like to make a last minute non-concessional contribution of $50,000 to his super account to boost his account balance before retirement.
Kyle is still working part-time in his legal practice and meets the requirements of the Work Test and his super balance is under the $1.6 million Total Super Balance cap.
Kyle’s 75th birthday is on 3 March 2019, so under the rules he can make a non-concessional (after-tax) contribution within 28 days of the end of March (30 March). This means the final deadline for making his contribution is 28 April 2019.
Downsizing your home: upsizing your super
If you cannot meet the rules for the work test, there is another way you can give your super account a boost – make a Downsizer contribution.
If you are aged 65 or over, a non?concessional (after-tax) Downsizer contribution of up to $300,000 can be made into your super account using the proceeds from the sale of your home. For couples, both partners can make a Downsizer contribution, so you can contribute up to $600,000 per couple into your super accounts.
You can make this type of contribution regardless of your work status or super contributions. Downsizer contributions are not tax deductible and are not counted towards the normal annual non-concessional contributions cap for those aged 65 or over ($100,000 in 2018/2019).
For more information about Downsizer contributions, see SuperGuide article Contributing to super by downsizing your home: 10-point guide