Yahoo Finance Super rule punishing Aussie retirees: 'Costs tens of thousands of dollars’
Thousands of Aussie retirees are being slugged with “duplicate” fees due to an “outdated” superannuation rule.
The cost-of-living crisis is spurring more older Aussies to come out of retirement and head back to work to earn some extra income. But there is a “outdated” superannuation rule that is punishing them for doing so and costing them thousands.
Australians who want to start working part-time after they retire are currently forced to open up an additional super account for their super contributions, rather than being able to make payments into their existing retirement accounts. This “red tape” means retirees then have to pay two sets of account fees and often more tax than they need to.
Financial adviser Alex Jamieson told Yahoo Finance this essentially meant retirees were faced with a “duplication in costs” with their accumulation and pension accounts.
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“When you do go back to work and you are receiving super contributions, you would need a second account,” Jamieson said.
“If you however have a self-managed super fund, that can handle an accumulation and a pension account within the one structure so that does have a bit more flexibility.”
The Super Members Council is calling on the government to end the ban on receiving contributions from part-time work or other sources into retirement accounts.
Are you a retiree who has returned to work? Contact tamika.seeto@yahooinc.com
The lobby group estimates this change would save retirees “tens of thousands of dollars" and benefit about 100,000 retirees.
“As more than 2.5 million Australians approach retirement in the next decade, the focus needs to be on making the system easier, simpler and allowing greater flexibility,” CEO Misha Schubert said.
“This simple red tape busting reform would make retirement easier and more flexible for tens of thousands of Australians.”
Data from a member fund found around one-quarter of their members in retirement had set up new accounts to accept super contributions. The number of members doing this is increasing, up 45 per cent between 2022 and 2023.
Aussies ‘struggling to make ends meet’
The “great un-retirement” trend was initially triggered by the pandemic, with more than 179,000 Aussies over the age of 55 rejoining the workforce between 2019 and 2022.
Since the pandemic, the retirement age has continued to increase with a KPMG study finding that it was now the highest it has been since the 1970s.
The average age of retirement for men is now 66.2 and for women, it is 64.8.
Jamieson told Yahoo Finance has been approached by many retires seeking advice as they consider returning to work to supplement their income.
“We are seeing that cost of living pressure, especially for someone who is on the age pension and living on a fairly modest income and has been hit by massive increases right across the board with their living costs,” Jamieson said.
“Although they might not have a mortgage, certainly their day-to-day living costs, whether it be insurance or whether it be household food items or energy prices, mean they are really struggling to make ends meet.”
National Seniors research found money was the most common motivation for older Australians re-entering paid work after retirement (52 per cent).
Other common reasons included staying physically and mentally active, contributing to society, socialising, and having fun in interesting and enjoyable jobs.
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