Education Centre

I like to build a relationship of trust with my clients, to help them think through their choices and make decisions to achieve their goals and needs. I am a great believer in keeping things simple, understandable and effective.
Vivek Krishan
Financial Planner SSFS

Building Your Wealth

Achieving the lifestyle you want when you come to leave full-time work doesn’t just happen. You need to plan for your future. But where do you start? Savings in superannuation attract a number of tax advantages with the added bonus of helping you secure your financial future. It’s important you understand that superannuation is a long-term investment. Once you make a superannuation contribution, the money will usually not be available for you to access until you reach your prescribed preservation age and retire.

There are a number of ways to save within the superannuation system that can enhance your savings. Four of the most popular are:

salary sacrifice;
personal after tax contributions;
spouse contributions; and
the government’s co-contributions.

Salary Sacrifice

One way to accelerate your retirement savings is to consider salary sacrifice. Salary sacrifice is simply a way of saving with pre-tax dollars. You arrange for your employer to make a superannuation contribution from your pre-tax salary. It’s important you are aware of the restrictions on the amount of salary sacrifice (or concessional contributions) you can make each financial year. If you do go over your Concessional Contributions Cap there are penalties which will apply.

Concessional (before-tax) Contributions Caps

From July 2009, the Federal Government lowered the amount of concessional, or before tax, contributions you can make tax effectively to your super. Concessional contributions include your employer’s super contributions, such as the compulsory Superannuation Guarantee Contribution of 9%, any salary sacrifice amounts you make and any personal contributions for which you claim a tax deduction.

Under the rules, the total concessional contributions which can be made each financial year are:

$25,000 for people under 50 years; or
$50,000 for people 50 years or over. This higher limit applies until 30 June 2012.

What Happens If I Go Over the Cap?

It’s important you don’t exceed your concessional contributions cap. If you do, your excess contributions will be taxed at an additional 31.5%, bringing the total tax to 46.5% (after contributions tax of 15% is paid). Excess concessional contributions will also be counted to the non-concessional (or ‘after tax’) contributions limit.

Are there different rules for members of the public sector superannuation schemes?

Special conditions apply for members of defined benefit schemes. Select your fund from the list below to find out details for your scheme.

SSS
SASS
Police (PSS)
CSS
PSS

Personal after tax contributions

Personal after tax contributions are contributions you make to your own super. They are made from income which you’ve already paid income tax on. These contributions include 'one off' contributions which may be made as the result of selling a property, receiving an inheritance or winning lotto. There are restrictions on these non-concessional contributions (contributions where no tax deduction is claimed). Generally, the limit for this type of contribution is $150,000 per annum or $450,000 in a three year period.

Spouse contributions

These are after tax contributions you make to the superannuation account of a non working or low income spouse. A contribution of $3,000 or more can entitle you to a tax offset of up to $540. If your partner is out of the workforce, for example caring for small children, this is an excellent way to maintain a long-term savings plan while, at the same time, creating a tax offset for the working partner.

Goverment co-contributions

The Government’s co-contribution scheme provides an incentive for lower income workers to contribute to superannuation. For example, if you earn up to $61,920 per year and you make a $1,000 personal contribution to superannuation, the government will make a top-up contribution of up to $1,000 direct to your superannuation account as a reward.

It’s important you speak with your financial planner who will help you decide which of these, or perhaps another strategy, is best suited to your individual situation. Give your member service team a call on 1800 620 305 and find out the best strategy to help you achieve financial security now and into the future.