Securing your future

Superannuation

Superannuation can be one of the most tax effective ways to build your retirement nest egg. There are a range of strategies you can consider to boost your super savings.

Consolidate your super

If you’ve had several jobs since you started working, you may have money in more than one super fund. More than one super fund means you could be paying unnecessary fees and insurance premiums on each one. Combining all your super funds into one can make your super easier to track, simpler to manage and ensure your savings are working hard for you.

Track down your super

Your super may be considered ‘lost’ if:

  • Your fund is not able to contact you and no rollovers or contributions have been made in the past year
  • You have been a member for at least two years and no contributions or rollovers have been made in the previous five years.

You can check whether any unclaimed or lost super belongs to you by visiting the ATO SuperSeeker website ato.gov.au/super or calling 13 28 65. You might find a handy sum to boost your super!

Do some housekeeping and make sure your super fund has your tax file number (TFN). This will make it easier to find lost super, move your super between accounts and receive super payments from your employer or the Government. Once you’ve tracked down all your super, you need to decide which super fund best suits your personal and financial circumstances. Before deciding on a fund, compare the costs and benefits of each.

There are three important things to consider before moving your super:

  • Will an exit fee be deducted from your investment?
  • Are there any investment and/or taxation implications?
  • Will you need to make new insurance arrangements?

Salary sacrifice

Currently, most employees receive super guarantee (SG) contributions from their employer of at least 9.5% of their salary. Adding to these contributions directly from your gross (pre-tax) salary can be an easy and tax-effective way to top up your super.

Some of the benefits of salary sacrifice are:

  • It’s simple, automatic and consistent
  • You do not pay income tax on salary sacrifice contributions to super (up to certain limits). Your super contributions are generally taxed at 15%, which may represent a significant tax saving, particularly if you are on the highest marginal tax rate of 49% (including the Medicare levy of 2% and Budget Repair Levy of 2%).
  • By making a salary sacrifice contribution, you can reduce your taxable income
  • The difference in taxation may mean more money is available to invest in super than if you were to receive the money as after-tax income and then invest it.

You should check with your employer first to see whether salary sacrifice arrangements are available and that adopting a salary sacrifice strategy will not reduce the amount of SG contributions your employer pays on your behalf.

Take advantage of the government co‑contribution

To encourage you to save for your retirement, if your total income is $35,454 pa or less and you make a $1,000 after-tax contribution to super, the Government will contribute up to $500 to your super.

The amount of government co-contribution reduces by 3.33 cents for every dollar you earn over $35,454 pa and ceases once your total income reaches $50,454 pa. When determining eligibility for the government co-contribution, earnings that are salary sacrificed to super and reportable fringe benefits come under the definition of total income. If you fit within the income thresholds outlined above, and satisfy some other conditions, contributing to your super from your after-tax salary before the end of financial year may be a great way to top up your super, and get an extra boost from the Government.

Split super with your spouse

If you have a spouse, you are permitted to transfer certain super contributions from the previous financial year over to the super account of your partner.

There are several reasons for considering splitting super with your spouse:

  • There may be potential tax advantages to withdrawing the money from two super accounts rather than one (between preservation age and age 59).
  • Transferring contributions from the younger spouse to the older spouse could enable you to access more retirement money earlier.
  • Transferring money from the older spouse to the younger spouse could enable the older spouse to receive more Age Pension by delaying the date at which their super becomes an assessable asset.
  • Splitting superannuation monies does not count towards the receiving spouse’s contributions cap.
  • Super splitting is not offered by all funds, so you will need to check whether your fund offers this feature.

A word on contributions caps

When considering any super strategy, it’s important to assess how much you are contributing to super in any one financial year. The government has set annual limits – known as contributions caps.

The annual contributions caps as of 1 July 2015 are:

  • $30,000 per financial year (indexed) for pre-tax (concessional) contributions if aged under 49 at 30 June 2015, or $35,000 (non-indexed) if aged 49 or over at 30 June 2015*1
  • $180,000 per financial year for after-tax (non-concessional) contributions or $540,000 over a three-year period if you are under 65 any time during the financial year you make the contribution.*2

We can provide you with the latest updates and more information on these opportunities.

*¹On 3 May 2016, as part of the 2016 Federal Budget, the Coalition government announced it intends to scrap the over-50s concessional (before-tax) contributions cap of $35,000 and replace it with a $25,000 cap, and reduce the general concessional contributions cap (for under-50s) to $25,000, from its current $30,000, taking effect from July 2017.
*²From 1 July 2017, the Government will lower the annual non-concessional (post-tax) contributions cap to $100,000 and will introduce a new constraint such that individuals with a balance of more than $1.6 million will no longer be eligible to make non-concessional contributions. As is currently the case, individuals under age 65 will be eligible to bring forward 3 years of non-concessional contributions. The new annual cap with the eligibility threshold replaces the lifetime $500,000 non-concessional contributions cap announced in the 2016-17 Budget.