Superannuation can be one of the most 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
One way to find out where your super is located is by checking the statements you have received from each of your previous super funds or by calling your past employers. If you can’t trace your super, it may be classified as ‘lost’. 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’ve been a member for at least 2 years and no contributions or rollovers have been made in the previous 5 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’ll need to provide your name, date of birth and tax file number. You might find a handy sum to boost your super!
Currently, most employees receive super guarantee (SG) contributions from their employer of at least 9.25% (1) 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. This is called salary sacrifice.
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 super 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 (2) is $33,516 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 $33,516 pa and ceases once your total income reaches $48,516 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 is a great way to top up your super, and get an extra boost from the government.
Rowland Advisory can give you the latest updates and more information on this opportunity.
Split super with your spouse
If you are a member of a couple, you are permitted to transfer your super contributions from the previous financial year over to the super account of your partner. If the receiving spouse is over 55 at the time of the split request, he or she must declare that they are not retired. Splits cannot be done once the receiving spouse turns 65. You can do this every year, once the financial year has ended. Up to 85% of taxable contributions such as employer, salary sacrifice and personal deductible contributions made to super can be transferred.
The benefits of spouse tax offsets
Another potential tax concession is a spouse tax offset. This strategy may be available if you are a taxpayer and a member of a couple that makes contributions to your spouse’s super. To take advantage of this strategy, your spouse will need to be under age 65 or aged 65 to 69 and have satisfied a work test during the financial year. You can open a super account in your spouse’s name and make contributions to that account from your after-tax pay. You can also make these contributions to your spouse’s existing super account.
A word on contribution 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.
Contact Rowland Financial Advisory for more information.
1. The super guarantee rate increased from 9% to 9.25% on 1 July 2013. It will continue to increase gradually each financial year until it reaches 12% on 1 July 2019.
2. Total income equals assessable income plus reportable fringe benefits plus reportable employer super contributions, less business deduction (other than for work related expenses or personal super contributions).