Working part-time may be part of a retirement strategy for some people, either because they want to keep working beyond retirement age, or because they can no longer cope with full-time hours before they reach retirement. Manual labourers often find themselves in the latter situation.
Under ‘transition to retirement’ rules that came into effect on 1 July 2005, superannuation funds are able to pay a pension to members who are still working provided they have reached their preservation age.
Superannuation funds are able to pay a pension to members who are still working
This means that, instead of having to leave work and/or their current employer, these people could work reduced hours, or perform different duties, and supplement their decreased employment income with a non-commutable (which means you can’t convert your super into a lump sum) superannuation pension.
If you are in this position and your fund offers this facility, then talk to your employer to see if they will allow you to alter your working arrangements. You would also need to consider the impact of the various arrangements on what you will pay in income tax, and your eventual income when you stop working altogether.
People accessing their benefits under the transition to retirement rules may even be able to work past Age Pension age and qualify for the Work Bonus scheme.
The Work Bonus can reward age pension customers who are also in paid employment. This new Work Bonus means the first $250 of employment income you earn each fortnight can be disregarded from the pension income test.
Any unused amount (if you earn between zero and $250 in a single fortnight) is added to your Work Bonus balance, which can accumulate to $6,500. Your Work Bonus balance can then be used to offset any future employment income you earn in a single fortnight above $250. For example, if one of the only times you work each year is casually in December as Santa Claus.
Talk to Centrelink about how this works.
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