What to do with my super if I'm not working?

What happens to my super if I’m not working?

If you have a super account but are no longer working for an employer, your super account will remain active, but you will no longer receive contributions from your employer, and any additional contributions you were making via salary sacrifice will also cease.

Even if you are not working, your super will keep ticking over, and your money will continue to be invested in whatever risk options you’ve already locked in with your super fund provider. You will likely still be charged some fees and potentially insurance premiums as well (if you have them as part of your super).

You might want to check with your provider to see what happens to any insurance cover, such as life insurance or Total and Permanent Disability cover, while you’re not working, and make sure that the super you have doesn’t get declared an inactive low-balance super account.

If you’re still some years away from retirement, then you might want to look at what options are available to help your super grow while you’re not working, if you have some extra money available to contribute.

How do I add to my super when I’m not working?

You are able to make personal contributions to your super while you’re not working, but the Australian Taxation Officer (ATO) says you will still have to comply with any cap that limits the amount you can add in a year.

The challenge, though, is that if you’re not working, then you’re not earning a wage or salary. You may still earn some money from any interest on savings or returns on investments, if you have them, or via Centrelink payments from ServicesAustralia. So it will depend on whether you want to add any of this money to your super.

Should you add cash to your super if you’re not working?

Canstar spoke to a number of super providers who all agreed that making payments into your super while not working was something to consider, if you can afford it.

Andy Darroch, the director of Independent Wealth Advice, suggests that the decision to add extra cash to your super will generally depend on your personal circumstances and finances, but that it is still a worthwhile consideration.

“If a person has surplus cash with which they are considering investing for the long-term they should always consider superannuation,” he said.

Derek Gascoigne, UniSuper’s State Manager Advice (Victoria/Tasmania), suggests that any amount you could afford, no matter how small, could help your super to grow.

“Consider whether to make voluntary contributions an option as part of a ‘drip feed’ strategy, to keep some funds flowing in, depending on your cash flow capacity (and) priorities,” he said.

Frank Ceravolo, Principal Advice Delivery at AustralianSuper, told Canstar that if you find yourself out of work, that might be a good time to check if the super fund you’re with is still right for you.

“It may pay to compare with other funds to ensure you’re getting the best value from your fund,” he said.

Mr. Ceravolo said you might also want to check to see if you’re paying for any insurance via your super that is no longer relevant.

If you are considering switching to another provider, it’s a good idea to check to make sure you’re not losing any particular benefit you might still need from your existing provider.

Is consolidating super a good idea if you’re not working?

Ms. Forman says you might also want to check to see if you have more than one super account. That may have happened if you’ve changed jobs and not told a new employer about an existing account, or they’ve not been able to determine if you had a stapled superannuation account. You can check what super accounts you may have via the Australian Government’s MyGov online portal.

“If you do find any lost super, consider rolling this into one account as you can save by avoiding multiple sets of fees, and insurance policies, which could impact your long-term super savings,” she said.

It’s easy to consolidate multiple super accounts, but again, check first to see if you’re going to lose any particular benefits you might still want from any account you’re about to close.

Can my partner pay into my super?

If you have a partner who is working and earning, they may be able to make contributions to your super on your behalf, known as spouse contributions.

There are two spouse contribution options available:

1. Making a personal spouse contribution, which is paid directly to your spouse’s account as a non-concessional (after tax) contribution.
2. Splitting your concessional (before tax) contributions into both of your super accounts.

Even if both you and your spouse have a healthy amount of super, you may feel it makes sense to optimise the potential tax benefits that come with this approach. That said, these tax benefits depend on you and your spouse’s personal circumstances and may not be appropriate for everyone.

Are there any risks to adding to my super while not working?

The main downside to making any voluntary contributions to your super is that you are locking that money away for your retirement. You generally won’t be able to get access to that money before retirement, although there are some exceptions.

“Superannuation is a retirement account, it’s not a savings account or an investment account,” said Mr. Darroch.

So if you’re not working, it comes back to the decision on whether you will make voluntary contributions to your super and how much, if any, of your available money would you use.

It’s a good idea to talk to your super fund to see what options may be available to you. You might also want to consider some independent professional advice before making any decision.