Do you have employees coming back from retirement?

WHAT YOU NEED TO KNOW ABOUT SUPERANNUATION

With the increasing pressure being put on our healthcare and aged care systems, we are seeing a significant rise in the number of retired nurses, personal care assistants and other frontline staff, returning to the workforce to help their community.

Supporting their return to work will be an important part of sustaining this vital workforce during challenging times, however you might not be entirely confident of your obligations to them.

To help you ensure your organisation complies with all relevant superannuation legislation, and to help you answer any questions staff may have, we’ve compiled the following FAQs.

We’ve also created a handout for you to provide to your new employees, as a reminder of the top things they need to consider about their finances as they return to the workforce.

Does the employee need a Superannuation Accumulation Account?

If the new employee does not have an accumulation account as they are in the Income Stream phase or they withdrew all of their super, you will need to check for a stapled account (post 1 November 2021). This is only required if they have not completed a ‘choice of fund’ form during onboarding. If they do not have a stapled account, the default process can be applied.

Can the employee take the 10 per cent Superannuation Guarantee as cash?

No, if they are earning more than $450 a month, you must pay them the 10 per cent Super Guarantee into an appropriate super fund. As of 1 July 2022, the $450 threshold will no longer apply, and all salary payments will attract Superannuation Guarantee payments. The change to the $450 threshold announced in the 2021 Federal budget is still awaiting legislation.

Can the employee make extra contributions (salary sacrifice or voluntary contributions)?

Yes, depending on their age they may need to meet the work test—you can find more information on the work test here. Your employees should contact their superannuation fund or a financial advisor to understand their options.

Can the employee return to work if they have accessed their super already?

Yes, there are no restrictions for an individual to return to work, even if they have already accessed their superannuation and commenced an income stream. However, if they are under 65 years of age, future contributions to their superannuation accumulation account will be preserved until they retire again, or turn 65. See conditions of release here.

What happens to the employee’s Retirement Income Stream (RIS) if they return to work?

A RIS continues to be paid, adjusted or reduced, depending on the preference of the employee. It may be a good idea for an employee to seek financial advice when they return to the workforce, as their financial situation will have changed since their retirement.

When employees are setup with a new accumulation account, will they receive default insurance?

It is highly likely that employees will receive default insurance, depending on their age.

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What happens to any Centrelink payments or concession cards an employee may currently receive?

Centrelink income support payments, like the age pension, have an Asset and Income test applied to determine the amount of support that should be provided. Concession cards may also be impacted. The employee will need to report any employment income they receive, and this may reduce their Centrelink payment.

Aware Super provides support to our participating employers to manage their superannuation obligations. If you’d like to learn more about how we can support your organisation please get in touch.

For more information contact Philip Seubert philip.seubert@aware.com.au or visit www.aware.com.au

The information contained in this Fusion edition is given in good faith and has been derived from sources believed to be reliable and accurate. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by Aware Super Pty Ltd (ABN 11 118 202 672,AFSL 293340)or its employees for any loss or damage arising from reliance on the information provided.