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SMC flags ‘outdated’ super rule for retirees re-entering the workforce
The Super Members Council (SMC) is asking the Australian government to “slash” the red tape that retirees are getting caught up in if they choose to return to work.
Currently, Australians who want to pick up part-time work after they retire must open an additional account for their super contributions, as opposed to being able to make payments directly into their retirement super accounts.
The SMC estimates that some 100,000 retirees would benefit from an overhaul of the rule and has called for the government to end the ban on receiving contributions from part-time work or other sources into their retirement phase accounts.
This, the industry body said, will save them from paying two sets of super fees and give people greater flexibility to choose how they spend their retirement, particularly as recent SMC-commissioned consumer research found that one in four Australians continue to work into their early 70s.
Notably, this would only require a “minor” legislative update to the Superannuation Industry Supervision Act and tweaks to associated regulations.
“As more than 2.5 million Australians approach retirement in the next decade, the focus needs to be on making the system easier, simpler and allowing greater flexibility,” said SMC CEO Misha Schubert.
“Increasingly, many Australians want to dip back into the workforce from time to time after they start their ‘capital R’ retirement,” Schubert said, noting that such people currently encounter “the administrative hassle of transferring money across into their main retirement account, and they pay extra fees – and perhaps more tax – than they need to”.
The body also pointed to deidentified data from one of its “large” member funds, which highlighted that one-quarter of its members in retirement set up new accounts to accept contributions and then commute to a new retirement income account.
“Importantly, the number of members doing this is growing – up 45 per cent between 2022 and 2023,” the SMC said.
It further clarified that, in proposing these changes, it does not suggest that changes be made to the pre-tax super contribution settings.
AUTHOR
Jessica Penny
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