Page 11 - Wealth-Adviser-Issue-137 (FWP)

ISSUE 137
MAY 2026

Contributing to super while drawing a pension from it is a separate question and one
that catches some people out. There is no rule against it — a person can run an account-
based pension from one part of their super while making contributions into another —
but the contributions are made into accumulation phase, not into the pension itself.

in that age band who wanted to make a voluntary super the cap. The strategy is one of the more valuable planning
contribution had to satisfy the work test — they had to have levers in this age band for those who qualify.
worked at least 40 hours within 30 consecutive days in the Contributing to super while drawing a pension from it
financial year. After 1 July 2022, the work test was removed is a separate question and one that catches some people
for non-concessional contributions and salary sacrifice out. There is no rule against it — a person can run an ac-
contributions. It still applies, however, for personal de- count-based pension from one part of their super while
ductible contributions — that is, after-tax contributions the making contributions into another — but the contributions
individual then claims a tax deduction for. The 40-hours-in- are made into accumulation phase, not into the pension
30-consecutive-days test must be met in the income year in itself. This means the contributed funds aren’t part of the
which the contribution is made. pension drawdown amount and aren’t subject to the transfer
The practical effect is a useful flexibility for people in balance cap until or unless they’re later commuted into
their late 60s and early 70s who are no longer working but pension phase. For working pensioners receiving SG, this is
who have surplus cash to top up super. They can make mechanically how the SG enters their super while they’re
non-concessional contributions (up to $120,000 a year, or also drawing down on the pre-existing pension.
up to $360,000 over three years using the bring-forward A brief cross-reference: the contribution caps, the car-
rule, subject to their total super balance being below the ry-forward rule, the downsizer contribution (now available
relevant threshold) without working at all. They cannot, from age 55), and the Division 296 tax (which applies from
however, claim a deduction for a personal contribution 1 July 2026 to balances over $3 million) were all covered in
without meeting the work test. detail in Issues 131, 132, and 134.
The Superannuation Guarantee position is now also
straightforward. The age limit on SG was abolished in 2013, Strategic considerations to bring to the adviser
so employers must pay SG for eligible workers of any age. The mechanics above describe the rules. The strategic
The SG rate reached its final legislated rate of 12 per cent questions that emerge from them are personal — they
on 1 July 2025 and remains there permanently — there are depend on assets, expected work duration, bequest pref-
no further scheduled increases. From 1 July 2026, payday erences, and the specific timing of major life events. The
super applies, meaning employers must remit SG at the article cannot answer those questions for any individual
same time as each pay run rather than quarterly, which is reader, and shouldn’t try. What it can do is name the ques-
covered in detail in Issues 132 and 134. For an older worker, tions worth raising.
the practical implication is that SG continues to accumulate The first is the timing of any Age Pension claim. For
in their super balance as long as they remain employed, someone working past 67, the temptation can be to delay
which can be a useful tax-effective channel for additional claiming the pension until employment income drops, on
savings even where retirement income is already drawn the assumption that the pension and the income test will
from a separate pension account. eat each other. That intuition is often partly wrong. Claiming
Carry-forward concessional contributions are particularly the pension at 67 — even where the payment is initially quite
relevant for many older workers. Someone who has been small — starts the work bonus clock running, which builds
under the annual concessional cap in earlier years — usually up the income bank for use in future years when employ-
because they were on a lower income, on parental leave, or ment may be more sporadic. Even a modest pension entitle-
contributing modestly — can accumulate up to five years of ment can provide access to supplement payments and the
unused cap to use in a later year, provided their total super Pensioner Concession Card, with its attached concessions
balance is below $500,000 on 30 June of the preceding year. on PBS prescriptions, council rates, public transport, and
For a worker in their late 60s or early 70s who has come into other state-based benefits. For most people working past
a windfall, sold a business, or simply has surplus cash from 67, claiming early is the more useful default, but the right
an inheritance or asset sale, carry-forward can support a answer depends on the specific income and asset position.
large concessional contribution that would otherwise breach The second question is the choice between drawing more

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