Super Contributions in Retirement

Article published 27 August 2018

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If you are retired but have a part time job or perhaps do seasonal work, your employer pays you 9.5 per cent on top of your pay as your Superannuation Guarantee.

This money needs to go into a superannuation account.

That is not a problem if you have superannuation account, but what if you don’t?

Or what if your superannuation fund pays you a defined benefit pension and is unable to receive your Superannuation Guarantee money?

It’s easy enough to open a new superannuation account, but the problem is that if your annual employment income is, say, $10,000 annually, $950 in Superannuation Guarantee contributions to an otherwise empty super account is likely to be largely consumed by fees.

Wouldn’t it be great if those retirees could be paid out their Superannuation Guarantee payments direct, without those payments passing through a superannuation account?

It would be logical, too, because these retirees are … retired. They’re no longer saving for their retirement. They’ll have all the money now, thank you very much!

While this would not be as straightforward as a simple, direct payment bypassing their superannuation account, CPSA believes the idea is good and would obviously complement existing initiatives, such as the Work Bonus, that encourage older people to continue in employment.

Obviously, the income tax of 15 per cent on Superannuation Guarantee payments would need to be paid, but other than that… why not?

CPSA has written to the federal Treasurer, pointing out that (1) the Government says it’s committed to removing red tape and (2) paying out Superannuation Guarantee payments to people on defined benefit pensions would be an opportunity to remove an unnecessary requirement that complicates people’s lives.

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