Back in business
07 Jan 2019
What happens if you’re retired but you get the itch to return to work? There are a few rules and regulations you probably need to be aware of…
Officially, you retired. Maybe you hit 60 and felt ready for a life of leisure. You announced your retirement, had the farewell drinks on your final day of work, and accessed some of your superannuation benefits to take an overseas trip and upgrade the car.
So what happens if a couple of years down the track you find you want to return to the world of work?
It’s not unusual to experience such an about-face. Many retirees are now combining part-time work
with taking a superannuation pension and possibly receiving a part age pension too.
Steve Pritchard, founder of insurance comparison website Cuuver, says: “It’s not surprising people retire and return to work; after working all their lives, retirement can feel unstimulating, or events can happen that require them to return to work, even if it’s only part-time.
“Perhaps children are getting married, health issues have arisen, or a partner has passed away. The cost of these circumstances can take a large chunk out of their pension.”
Whether it’s a financially driven decision or a desire for more fulfilment in life, it’s worth knowing the rules about returning to work.
What you need to know
If you reached your preservation age and decided to retire and access your super, it would have meant notifying your super fund that you were fully retired and didn’t intend to seek regular employment again. This includes employment on a full-time and part-time basis. Full-time employment is defined as more than 30 hours a week, and part-time employment is defined as working a minimum of 10 hours a week up to 30 hours a week.
You aren’t allowed to access your super if you simply reduce the hours you work at your current job to under 10 hours. In that case, you’re not considered to be officially retired. From age 60, you can cease an employment arrangement and access your super benefits as a lump sum or as regular payments without declaring your retirement.
Once you reach age 65, you don’t have to be retired or satisfy any special conditions to get full access to your super benefits.
Even if you are aged under 65, you can still return to work if your situation changes or you have genuinely changed your mind about retirement. You don’t have to put any money you accessed back into super, or if you transferred it into an account-based pension, you also don’t have to put it back into super.
The super fund won’t penalise you if you decide to go back to work. In fact, if you are under 65, you can still make super contributions whether you are fully retired or working part-time or full-time.
If you earn more than $450 a month, your employer will be required to make super contributions on your behalf.
If you are over the age of 65, you will need to complete a work test requirement if you want to make voluntary contributions to super and you are employed part-time; and if you are over the age of 75, you can still work but
can’t make voluntary contributions.
The work test requires that you work at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you want to make a super contribution. The work test can be satisfied if the income comes from any “employment” including babysitting, farm work, gardening, consulting and paid employment.
Before returning to work, it’s worth having a conversation with your accountant or financial adviser. The decision may impact your tax situation and your age pension entitlement. There are some generous concessions for part-time employed age pensioners.
If an age pensioner gets income from work (not self-employed income, investments or super income, for instance) the work bonus will be added to their assessable income before they receive the pension payment.
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