Date posted: 09/04/2020

JobKeeper – the Impact on Superannuation and Retirement Incomes

Mixing JobKeeper with superannuation requirements was always going to throw up unexpected issues. Here we seek to deal with some of the consequences of these payments.

Super and Industrial Relations

Super and industrial relations have been uneasy bedfellows for many years.  Compulsory super – that is, the Super Guarantee – requirements might have been trumped by a particular employment award, workplace agreement or other enforceable employment document or determination.  In truth the exact opposite was also true – the SG rules might have provided for larger employer super payments than is contained in award, workplace agreement etc.

For example an employment award might stipulate a compulsory employer super contribution rate higher than the SG and a small selection of particular super funds that an employer had to make those contributions to.

Employers have always had to find a way to ensure they complied with all these complex and convoluted rules.  It has never been easy.

The JobKeeper payment processes allow an employer to reasonably alter an employee's duties, location and days of work.  And it allows an employer to reduce how much they pay an employee but not reduce their normal hourly rate of pay.

All rules not currently known

At this point in time many of the rules around JobKeeper are unknown.  We are waiting to see the final detail.  Some of the finer details are likely to impact the superannuation area.

Employers SG Obligations

Employers will still have to pay Super Guarantee on their employees Ordinary Time Earnings (in order to comply with the SG requirements).

For those employees:

  • who are paid more than the $1,500 per fortnight JobKeeper payment – an employer will owe SG on the OTE amount including the JobKeeper amount
  • who are paid the $1,500 per fortnight JobKeeper payment but who were paid OTE more than the $1,500 per fortnight an employer will owe SG on the JobKeeper amount
  • who were ordinarily paid less than the $1,500 per fortnight JobKeeper payment an employer can either pay SG on the normal OTE or on the $1,500 amount

Please note that these are our understanding of the rules and how they are meant to operate.  We are waiting to see the final version of these rules before being sure of the precise rules.

Salary Sacrifice Arrangements

Salary sacrifice arrangements can continue if an employer and employee agree.

JobKeeper payments can be paid to a super fund under such arrangements.  However, remember that since 1 January 2020 salary sacrifice contributions can not be use by an employer to satisfy their SG obligations.
Similarly, employees who salary sacrifice amounts are included as employees eligible for JobKeeper payments.

JobKeeper and Age Pensioners who work

An Age Pensioner can earn up to $300 per fortnight without the income from work being caught in the Age Pension income test.  This concession is in addition to the normal income free area or $104 per fortnight for a single person and $208 per fortnight for a couple.

If an age pensioner's work is impacted by the coronavirus economic downturn and as a result that age pensioner receives the $1,500 JobKeeper payments then this will be counted as income for the age pension income test.  This is something all such age pensioners would need to take into account.

JobKeeper legislation enacted

Payment scheme passed Parliament on 8 April 2020 and is awaiting Royal Assent. Read some insisted and check out the bills...

Read more