An increase in the superannuation contribution cap will allow those aged 65 to 67 to use their superannuation as a ‘piggy bank’ in the future, according to self-managed super fund (SMSF) services provider, SuperConcepts.
In an AMP webinar, the newly-legislated measures were described as an “attractive offer”.
Under new legislation in the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, bring-forward measures would enable individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions. Previously, this only applied to those under age 65.
The age at which the work test would apply for voluntary concessional and non-concessional superannuation contributions would increase from 65 to 67 and individuals aged 65 and 66 would be able to make up to three years of non-concessional superannuation contributions under the bring-forward rule.
The non-concessional contribution cap would increase from $100,000 to $110,000 from 1 July, 2021.
Graeme Colley, SuperConcepts executive manager, said: “The abolition of the works test between 67 and 75 for some contributions, mainly non-concessional ones, means if you are 67 then you can take your money out and put it back in if the rules allow. That’s an important change.
“This lets super for people over 65 use it like a ‘piggy bank’ where you put money in and get the tax concessions on that income, then when they need it they can drawdown a lump sum.”
As to whether the measures would later be reversed by future Governments, Colley said this was unlikely as it would be a popular policy with voters.
“They can keep doing this if you qualify until age 75 which is a generous amount of time given by the Government, it is an attractive offer from the start and will be popular with voters as a good tax strategy,” Colley said.