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More choice and flexibility in saving for retirement

The Budget delivered some good news for retirees and Australians who are transitioning to retirement.

  • A change to the work test rule means older Australians can contribute more to their retirement savings
  • Pensioners will be able to earn more without reducing their pensions

An extra year and more flexibility to contribute to super

The work test is a requirement for people aged 65 or over (but under 75) to work at least 40 hours in a 30-day period if they want to make voluntary super contributions. Currently the 40-hour work test must be met during the financial year in which you make the super contribution.

What’s the change?

From 1 July 2019, Australians aged 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for an additional 12 months after the end of the financial year in which they last met the work test.

What does this mean?

Older Australians will have more flexibility in how they make voluntary super contributions close to retirement.


Mary, a school teacher aged 67, plans to retire just after the end of the school year in January 2019. She has $280,000 in super, and an investment property worth $250,000 which she had always planned to sell at retirement.

Under current rules the only way to get any of the proceeds from the property sale into super would have been to sell it in the 2018-19 financial year. This means she would incur capital gains tax at her marginal rate on top of her six months of employment income.

From 1 July 2019, Mary will have the option of selling the property in the following financial year (2019-20) when her marginal tax rate is lower. So she will pay less capital gains tax, and still contribute some of the proceeds into super.

Earning more in retirement

The Pension Work Bonus is a social security income test concession for age pensioners. Currently, the first $250 of employment income a fortnight is not counted in the Age Pension income test, and it does not apply to income earned from self-employment. So if you’re on the Age Pension, you can work as much as you want but beyond a certain threshold, it will reduce the amount of Age Pension you receive.

What’s the change

From 1 July 2019, the Government is supporting older Australians who choose to work more and improve their income by increasing the Pension Work Bonus to $300 a fortnight, from $250 a fortnight. This will also apply to those who are self employed.

What does this mean?

You can earn an extra $50 a fortnight before your income is assessed by social security means testing.


Bill is 68 and enjoys keeping active. He earns $550 a fortnight by working 22 hours a fortnight at the local hardware store, earning $25 per hour. He’s married to Jane who does not work, and they each receive the Age Pension. Bill would love to work a bit more. However under current rules, if he works an additional two hours a fortnight, his Age Pension starts to reduce under Centrelink’s income test. This effectively reduces his wage to $12.50 an hour, for those extra two hours of work. From 1 July 2019, Bill will be able to work the extra two hours and effectively ‘earn’ $25 an hour without losing any Age Pension.

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