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Financial Advice Regarding Retirement Saving

Source: Matthew O’Donnell at IDEAS@THECENTRE 

Changes to Superannuation Law

The Government has introduced a package of measures to provide individuals with more flexibility in planning for their retirement, particularly in regard to contributions.

Super contributions work test age increase

From 1 July 2020, if you’re under age 67, you can make voluntary personal contributions without needing to meet the work test.

The work test means you need to have been gainfully employed or self-employed (for gain or reward) for at least 40 hours in a period of not more than 30 consecutive days in the financial year (ending 30 June) before you make the contribution.*

If you’re between 67 and 74, you need to meet the work test or work test exemption to make personal contributions to super. The work test exemption applies if you met the work test in the previous financial year and your total super balance was less than $300,000 on the previous 30 June. 

Note – If you are under 67 years of age, please disregard any warnings requiring you to submit a work test declaration. You can proceed with making your contribution without the need to do so.

Bring forward non-concessional contribution cap

From 1 July 2020, if you’re aged between 65 and 66 you may be eligible to make personal contributions up to $300,000 to your super account. The bring forward rule allows eligible members to bring forward up to an additional two years of personal (post tax) contributions without exceeding the contribution cap. For information on the current contribution caps refer to

Spouse contributions

From 1 July 2020, the eligibility age to receive spouse contributions has been increased from age 70 to 75. This means that you may be eligible to receive spouse contributions if you’re under age 75. If you’re between the ages of 67-74 you may be eligible to receive spouse contributions subject to meeting the work test or work test exemption.

For more information on concessional contributions refer to

Changes to death benefit Rollovers (DBRs)

Since 1 July 2017, death benefits have been able to be rolled over to another super fund provided a death benefit pension is commenced in the receiving fund. When these changes were introduced there was an unintended consequence in the legislation which meant that in some cases, members rolling over a death benefit to another fund may be subject to tax. This occurs where the transferring fund calculates an untaxed element as part of the rollover, to which the receiving fund would then apply tax at 15%. The Government announced that this was not the policy intent and committed to rectifying this issue.

The change aims to remove the unintended consequence by excluding any untaxed element from a fund’s assessable income upon receipt of a death benefit rollover.

This will ensure that death benefits of this kind are not taxed when they are rolled over to a new super fund meaning that death benefit lump sums and pension payments remain tax-free for dependants, even if rolled over within the super system. Note, the requirement not to tax the amounts of the untaxed element received applies only to death benefit rollovers.

Capped defined benefit income stream (CDBIS) changes

Previously a partial or full commutation of certain capped defined benefit income streams (life expectancy and market linked income steams) gave rise to a nil transfer balance debit under the individual’s transfer balance cap. This was an unintended outcome which created the potential for an individual to incorrectly exceed their transfer balance cap and could result in an amount needing to be commuted and a potential tax liability. This is not the correct outcome and was not the original policy intent of the legislation. Changes have been made to legislation and the calculation to prevent this moving forward.

*Source: BT Financial Group

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