In this guide
Have you ever wondered if retiring and starting a super pension will stop you from returning to work if you have a change of heart?
The short answer is no, it won’t.
Retirement isn’t a ‘locked-in’ contract. You can retire and boomerang back into paid work if you’re so inclined.
You may retire and then suddenly be enticed back to work by someone who values your skills. Some people get bored and decide retirement doesn’t suit them, while others worry their retirement savings are being depleted too quickly. Some early retirees may discover their spouse doesn’t want them hanging around the house all day – and there’s only so much golf a person can play!
But as with everything to do with super, there are rules…
To access your super in the first place, you need to satisfy a condition of release. The rules vary depending on your age.
If you’re 60 or older but not yet 65
Once you turn 60 and ‘cease gainful employment’ you can start withdrawing your super as a pension, lump sum or combination of the two.
(‘Gainful employment’ in this context has a technical meaning. That is, receiving any sort of monetary reward for working at least ten hours a week.)
You simply notify your fund that you’re retiring or, if you have an SMSF, write a ‘note to self’ to that effect.
You don’t even need to fully retire. You may be changing jobs or you may have resigned from one job and kept another (or others). The key is that the date you left a job must be on or after your 60th birthday.
You can then return to work whenever you like and continue to access your super.
However, if you ceased gainful employment before you turned 60, you can only access your super between the ages of 60 and 65 if you make a declaration to your super fund that you have permanently retired and have no intention of becoming gainfully employed again in the future.
Intention is the operative word here. If your circumstances change or you have a change of heart and want to return to work, you can.
Either way, if you return to work you can continue to access the super you had accumulated at the time you made your initial retirement declaration. Any super you accumulate from your new job must be preserved until you meet the retirement condition of release a second time or turn 65.
If you’re 65 or older
From age 65 you can access your super whether you’re retired or not, without having to satisfy any special conditions of release.
This means you can continue working full or part time or retire and return to work whenever you want.
Can I add to my super?
When you return to work, you can rebuild your super via compulsory Super Guarantee contributions from your employer or your own voluntary contributions.
If you have previously transferred all your super savings into a pension account and closed your accumulation account(s), you will need to open a new accumulation account to accept new contributions.
Even though you can continue to access your super after you return to work, any new contributions will be ‘preserved’ until you meet a new condition of release unless you are over 65.
However, once you turn 67 you can only make personal contributions for which you intend to claim a tax deduction if you satisfy the work test. To make this type of concessional contribution, you must show that you’ve worked for at least 40 hours in a 30-day period during the financial year you make the contribution.
The good news is that, from July 2022, the work test has been repealed for people aged 67 to 75 who wish to make non-concessional (after-tax) contributions or salary-sacrifice contributions.
No voluntary contributions can be made once you turn 75. The one exception is downsizer contributions made with the proceeds from the sale of your home. There is currently no upper age limit on downsizer contributions.
Pros and cons
Before you get back in the saddle, it’s important to understand the implications for your super and future retirement income.
The main benefit of retiring before starting a new career or taking on some part-time work is that the money in your super pension is tax free from age 60.
The downside of retiring early and accessing your super is that you run the risk of outliving your savings, depending on the size of your nest egg to begin with.
If you want to have your cake and eat it too, then satisfying a condition of release to access your super then returning to full- or part-time work may well be worth considering.
The information contained in this article is general in nature. Accessing your super is an important financial decision and it’s best to seek independent professional advice based on your individual financial needs and circumstances.
