Reward your future self with voluntary contributions


You can make additional contributions to top up your super by salary sacrificing or by making after-tax contributions.

If you're eligible you could also take advantage of the Government's co-contribution scheme. Making voluntary contributions toward your super will help you prepare for a better future and could also provide you with tax benefits.


Why it's important to top up your super

If you want to stop working at an earlier age and maintain your current lifestyle, relying on your employers' super guarantee (SG) contributions alone probably won't be enough.

According to research a couple may need about $57,817 a year ($42,254 for a single) to maintain a “comfortable lifestyle” in retirement*. You may enjoy 20 years or more in retirement so having enough saved could mean the difference between maintaining your lifestyle and just getting by.

The good news is that you can take an active role now in helping to grow your super by making voluntary contributions. The key is to start now.

*Westpac/ASFA Retirement Standard, March 2014 quarter.


Who can contribute to super?

Anyone under the age of 65 can contribute to a super fund. If you are between the ages of 65 and 74 you can contribute to super if you have worked at least 40 hours in a continuous 30 day period within the financial year.


Salary sacrificing may help boost your super and save you tax

Salary sacrificing is where you forgo some of your pre-tax salary in exchange for super contributions. Salary sacrifice may offer tax advantages for people on a higher marginal tax rate. For example, instead of being taxed at a marginal rate of up to 47%, the sacrificed amount may be taxed at only 15%**.

** An additional 15% tax applies to some or all of the concessional contributions of high income earners (generally those whose 'incomes' and concessional contributions exceed $300,000 pa).

You should speak with your employer if you're interested in salary sacrificing to your super.

Did you know: Pre-tax contributions (referred to as concessional contributions, which include super guarantee, employer and salary sacrifice contributions) are subject to a contributions cap.


Making after-tax contributions

An after-tax contribution (known as non-concessional contribution) is where you make a contribution from funds on which you've already paid income tax at your marginal tax rate. After-tax contributions aren't taxed when they are contributed to your super fund because you've already paid tax on them. A tax of up to 15% is payable on earnings.

Did you know: After-tax contributions are subject to contribution caps and any contributions in excess of the caps will be subject to an additional tax of 47%. Prior to making an after-tax contribution you should make sure you aren't going to exceed the cap that applies to your situation.


Let the Government help top up your super with co-contributions

If you make an after-tax contribution to super, meet certain eligibility criteria and you have 'total income' of no more than $49,488 in the 2014/15 financial year, you may also be eligible to receive a Government Co-contribution, up to a maximum of $500^. It pays to check whether you, your spouse or your kids could be eligible for a co-contribution.

^The maximum co-contribution is $500, paid at the rate of 50 cents for each $1 of contribution. The maximum is only available to people with an income of $34,488 or less. Above this level, the maximum co-contribution reduced by 3.33c per dollar of income. The co-contribution scheme ceases completely at total income of $49,488.


Things to consider when developing your contribution strategy

There are a number of things to consider when making a decision about your personal contribution strategy. These include:

  • How much surplus income you have available to invest
  • Are there other things, such as debt, which you may want to pay of first, and
  • Whether you can commit to leaving these extra contributions in super until you reach your preservation age and are able to access them.

A financial adviser can assist you to determine whether a pre-tax or post-tax contribution is appropriate in your circumstances and what effect these strategies may have on your other entitlements.


We're here to help

Got a question about contributions? Contact us.

This information has been prepared by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take.
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