In an article for the website afr.com, Ben Smythe talks about those people who feel “the daily grind of retirement” a heavy weight to carry and their new employer- the SMSF pension- an unlikeable boss. Interesting start! Keep reading!
Seeking job after having retired- possible complications
Smythe further questions- what may happen in the cases when people get a new job after retirement and start over again? Do they restart contributing into their fund, building their SMSFs anew and how is their existing pension treated? Pertinent questions!
Below or above 65 years of age?
To answer, it can turn out to be a smooth transition if you are below 65 years of age. If you are over 65, you will have to show work equal to 40 hours in a period not exceeding 30 days in order to start re-contributing to your SMSF.
Work test
Two things about the work test- 1) it needs to be paid work and you cannot start re-contributing if you are doing voluntary work. 2) Work test has no relation to the employee contribution of 9.5%; it is related to the voluntary contribution apart from the 9.5%.
Accumulation and pension account
Both your new accumulation account and your present pension account are generously accommodated by your SMSF and you do not need to open a fresh account. While you won’t need a separate bank account, you will certainly need an accumulation account. You cannot contribute into your pension account, after all.
There is an ongoing debate about whether one should cease using the pension account and convert balance into an accumulation fund. It is a tricky terrain and the answer, says Smythe, really depends upon the leverage provided by your cash flow or tax liability. In any case, ensure that you are taking out minimum pension every year.
You can read the original article here.
There are definitely aspects which require the scrutiny of a professional- take for instance, whether you need to convert your pension account into an accumulation fund or if you can keep going with the pension fund?
If such questions are working on your mind, feel free to talk to me today. You won’t like being brought down by a new crisis in your second innings.
