You don't have credit card details available. You will be redirected to update payment method page. Click OK to continue.
Question 1: My wife and I have an SMSF and she will reach her preservation age on 15th June 2019. She stopped working while raising the children.
I encouraged her to get some part time work a couple of years back, but she has never worked more than 10 hours per week and does not intend to work more than this. She currently has a part time contract with Woolworths for 10 hours per week. On her preservation age, is she allowed to convert her super, that is in accumulation phase, into an account based pension?
Was she ever classed as gainfully employed under this part time contract?
Question 2: I had fully retired from the public service at age 55 and am now 62. My super is currently in an account based pension. A few years back with GFC, etc, I decided to get a casual job, now a part time contract for 10 hours per week with Coles.
Most weeks they ask me to work more than my contracted 10 hours. I have been told that if I pay in a non-concessional amount of say $300,000, it would have to go into an accumulation account and not an account based pension. Is this correct? Would reducing my work to the contracted 10 hours per week be enough to allow the non-concessional amount to become an account based pension or would I have to resign from my part time contract?
A: The SIS Act Regulations define retirement as:
“The retirement of a person is taken to occur:
(a) in the case of a person who has reached a preservation age that is less than 60–if:
(i) an arrangement under which the member was gainfully employed has come to an end; and
(ii) the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis; or
(b) in the case of a person who has attained the age of 60–an arrangement under which the member was gainfully employed has come to an end, and either of the following circumstances apply:
(i) the person attained that age on or before the ending of the employment; or
(ii) the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis.
Part time is defined as being gainfully employed (part-time) as working at least 10 hours but less than 30 hours per week.
In regard to question 1, I assume that your wife will be under 60 when she reaches preservation age on 15 June 2019. If she has retired from all employment and at that time intends to work less than 10 hours per week, then she will be treated as retired. This does not prevent her from returning to work at a later time providing at the time of ceasing that employment she has fully and effectively retired. If this is the case, she should be able to covert her super to an account based pension. Also, at the time of retiring the Trustee needs to be satisfied that your wife never intends to be gainfully employed in future.
In regards to question 2, contributions are always made into an “accumulation” account and if eligible, an account based pension can then commence.
As you are over 60, retirement is when you have ceased any employment. For example, you may have more than 1 employment and cease one of those jobs. You will qualify as retired even though you may continue to work in another job(s) or commence another job in future. Once you reach age 60 it is easier to qualify as being retired. Of course, once you have reached 65 you can commence an account based pension any time you like.
If Coles is your only employment arrangement, then this employment will have to cease if you want to be retired and commence the account based pension. Reducing your work hours to part-time or casual with the same employer is not a full and effective retirement for superannuation purposes.
