Transition to retirement and part-time work

Q:

When I retire from full-time employment and take out my full superannuation, how long do I have to wait until I can return to the same job in a part-time capacity working 13 hours per week?

Financial Planning expert, Ian Heraud writes:
Assuming your super is fully preserved you can still access it under one of the following conditions:

• If you are over 55 and fully retire;
• If you are over 60 and leave your employment;
• If you are over 65 it can be accessed regardless of whether you retire or not.

Anyone under 55 generally can't access their super unless it is due to their permanent incapacity, severe financial hardship or compassionate grounds.
Let’s assume you are between age 55 and 60. For you to access your preserved super will require you to sign a declaration stating that you have no intention of becoming gainfully employed in the future for 10 hours or more per week.

This statement refers to any gainful employment whether it is with your current employer or any employer. It even applies to any intent to become self employed.

Whether you actually return to work is not relevant. It is what your intention is when signing the declaration.

For example, if you fully intend to retire in order to access your super and then subsequently change your mind and return to work, that is not a problem.

If, however, you have arranged to come back to work after say one week, it would not be hard to prove that you signed a false declaration.

If caught, you face the risk of having the lump sum added to your assessable income and taxed at up to 46.5%.

Note that provided you are over 55, you are able to access your super as a regular income stream. Under this option you will be able to access up to 10% of your super balance annually.

Where to find out more

Answer this week provided by Ian Heraud from Shadforth Financial Group, a member of the Financial Planning Association. Phone 03 9521 3833, www.sfg.com.au

To find a financial planner, call the FPA on 1300 626 393 or visit www.goodadvice.com.au

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