Lately I have had questions from employers about making superannuation contributions for employees who are aged over sixty five.

The short answer is that an employer must pay “mandated” contributions until the employee reaches age 70. Mandated contributions are contributions that an employer must make to meet their obligations under any of the following:

•        Super Guarantee law
•        An industrial agreement
•        The trust deed or governing rules of a super fund
•        A federal, state or territory law. 

If the employer wanted to pay more than the mandated contribution the employee would have to meet the “work test”.  That test basically requires the employee to have worked at least 40 hours within 30 consecutive days in the financial year in which the payment is made.

The game changes a bit when the employee turns 70 though because the Superannuation Guarantee Act states that the salary or wages paid to an employee who is 70 or over are not to be taken into account

The practical effect of that is, while an employer cannot make an S.G. contribution after an employee turns 70, the employer may make a contribution voluntarily (provided the “work test” is met by the employee). 

Of course the employer still has to make any “mandated contributions” required regardless of the work test.

The situation changes again once the employee turns 75.  Then the employer can only make ‘mandated contributions’

So if your business wants to make a contribution for an employee age 75 or over, there must have an industrial agreement in place that makes it a requirement for superannuation to be paid for those employees.

Am I alone in thinking that it would be so much easier for employers if the Superannuation Guarantee simply had the age limit removed?