Help, I’m 76 and want to contribute more to my super, but I’ve been told I can’t!
This was the cry for help we received from Albert last week. He’s just turned 76 and came into some money unexpectedly, through a lottery win. He’s decided he doesn’t have anything to spend this $45,000 on and so wanted to put it into his super. The rules say you can’t contribute to a decumulation account such as an account based pension, so that was never going to work. But he also still has an accumulation account and he wanted to invest his winnings there. A friend at Albert’s service club told him that once you turn 75 you can no longer make any contributions. Hence his email seeking clarification.
The good news is that Albert’s friend’s summary is not entirely correct. Over-75-year-olds can continue to put money into super accumulation accounts.
The bad news is that there are only two specific ways of doing this.
Let’s take time to have a refresh on the rules on contributions.
Putting money into super
During your working life and into retirement, there are many ways you are encouraged to invest money in your super. Some ways are voluntary ((concessional and non-concessional)), others are not.
The mandatory contributions are made by your employer through the Super Guarantee, which currently sits at 11% of your salary, regardless of how much you earn.
According to the Australian Taxation Office (ATO) there are 11 different types of voluntary contributions. Voluntary contributions don’t include any mandatory contributions made by your employer.
Here is the ATO list of voluntary contributions:
- salary sacrifice contributions
- personal contributions – If you are aged 67-74 you need to meet a work test or hold a work test exemption to claim a tax deduction for these contributions.
- spouse contributions
- contributions by parents, other family or friends (not in the capacity of an employer)
- contributions by an insurer
- contributions by employers above their SG or award obligations
- government co-contributions
- downsizer contributions
- super capital gains tax cap election amounts
- personal injury election amounts
- first home super saver scheme contributions
In summary, the only contribution above that can be made into the super account of someone over 75 is by an employer through the super guarantee. There is some leeway regarding contributions in the 28 days after you turn 75! This includes:
- salary sacrifice
- some other amounts paid by your employer
- personal or spouse contributions. … OR …
The exception to the rule …
The Downsizer Contribution has no age limit. If you are 75, 76 or older your fund can always accept downsizer contributions..
Sadly, the downsizer contribution and compulsory employer contributions cannot be used by Albert as he no longer works and has no plans to sell his home. But at least he is clear on the rules now. And in talking to one of the Retirement Essentials team he was able to explore whether using his lottery win to make his home more accessible might be a smart idea. The money he spends on the renovation won’t be assessable and therefore won’t impact his part-Age Pension.
Are you unsure of the rules that relate to your super contributions and income streams? Why not have a chat with one of our advisers to check the rules that are relevant to your situation? Decision-making can be so much easier when you know all the details.
Is capping most super contributions for those over 75 really fair?
Or could this be viewed as some form of ageism?