I am pleased to announce that regulations to give recent retirees an extra year to contribute to superannuation have been made by the Federal Executive Council.
This measure will boost older Australians’ confidence in their financial security by providing additional flexibility to contribute to superannuation in the transition to retirement.
The work test exemption was announced in the 2018-19 Budget as part of the More Choices for a Longer Life package.
The regulations mean that from 1 July 2019, Australians aged 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test.
Total superannuation balances will be assessed for eligibility at the beginning of the financial year following the year that they last met the work test. Once eligible, there is no requirement for individuals to remain under the $300,000 balance cap for the duration of the 12 month period.
Existing annual concessional and non-concessional caps ($25,000 and $100,000 respectively) will continue to apply to contributions made under the work test exemption.
Individuals will also be able to access unused concessional cap space to contribute more than $25,000 under existing concessional cap carry forward rules during the 12 months.
Following feedback from stakeholders on the draft legislation, the Government has decided to allow those who use the work test exemption in the year they turn 65 to access bring forward arrangements for non-concessional contributions.
These individuals will be able to make up to $300,000 in contributions from after-tax income, providing extra flexibility to get their affairs in order as they prepare for retirement.
This change will also align the contribution rules for the work test exemption with those that apply under the work test, making the system simple to understand for members.