What happens if I need to go back to work after I’ve retired?

Q:

Q. When I retire (I’m 57), my super fund requires that I sign a statutory declaration saying that I do not intend to work full-time or part-time again. A financial adviser told me that I would be allowed to work 10 hours a week without contravening that declaration. If I want (or need) to work part-time, casual or freelance after I receive my super, what are the rules? My total super payout will be under the tax-free amount of $140,000.

Our expert is Nicolas d'Emden, private client adviser and representative of Shadforth Financial Group

A: Hi Paul, thanks for your question. Superannuation benefits are generally preserved in your superannuation fund until such time as a condition to release is met.

Conditions of release include, but are not restricted to, attaining 65 years of age, having a terminal medical condition, permanent incapacity or, as in your case, retirement on or after you have reached your preservation age.

Your preservation age is determined by your date of birth. Those like yourself born before July 1, 1960, have a preservation age of 55, those born on or after July 1, 1964, have a preservation age of 60 (in-between it depends on the year you were born as to what your preservation age is).

The definition of retirement depends on each individual’s age. In the case of a person who has reached preservation age and is still under 60 years, retirement is when:

• an arrangement under which you were gainfully employed has come to an end, and
• the trustee of your superannuation fund is reasonably satisfied that you intend never to again become gainfully employed for 10 hours or more each week.

If the trustee of your superannuation fund is satisfied that you meet these two conditions, then your preserved benefits and restricted non-preserved benefits become unrestricted and non-preserved; basically you can get access to them.

As is stated in the second condition, so long as you do not intend to become gainfully employed for 10 hours or more, then you will not breach this condition.

The question is your intention, and the tax office will look at this if you start work again.

I am sure it would argue that if you retired, got access to your superannuation and were back at work the following week, you did not intend to never again be gainfully employed.

It is not an uncommon scenario, a lot of people retire in your position with no intention of ever working again (why would you!), but years down the track either get bored or run out of money and have to start work again, whether it be out of necessity or not.

As long as it is your intention at the time of retiring not to work again you should be fine.

Where to find out more

Get in contact with Nicolas d'Emden at Shadforth Financial Group Shadforth Financial Group.