Finance Your Super Maximise your super contributions at any income

Maximise your super contributions at any income

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While a high income certainly helps, a healthy superannuation balance and happy retirement doesn’t only depend on how much you earn.

There are many government initiatives in place which allow you to benefit from voluntary super contributions, regardless of whether your income is $50,000 or $500,000.

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• How much do you need to retire at 65?

We have quizzed the experts on the rules surrounding salary sacrifice for each income group, and they have offered their super-boosting tips.

Low income earners

The government rewards low-income earners if they voluntarily contribute anything to their superannuation beyond the guaranteed 9.5 per cent.

If your income is less than $49,488 you may be eligible for a government co-contribution which puts in 50 cents for every dollar you contribute to super from your take-home pay, up to a maximum of $500 in 2014-15.

• How stay-at-home parents can maximise their super  

CareSuper CEO Julie Lander emphasises the importance of low-income earners maximising on the government’s co-contribution.

“Every dollar counts and every dollar is going to be earning compound interest over the years. People should not be put off because they’re on a low income,” says Ms Lander.

Check the MoneySmart super co-contribution calculator to find out how much you are eligible for

Middle income earners

Middle income earners need to be aware that they won’t necessarily save enough to retire comfortably and that they may need to contribute more to their super than the guaranteed 9.5 per cent.

Those who want to make voluntary contributions to their super need to be aware of limits on the amount they can contribute each year at a low tax rate.

“If you are 48 or younger, the concessional cap is $30,000, and if you are over that age then the concessional cap is $35,000,” says Ms Lander.

When you reach your cap, your contribution will be taxed at the rate of 31.5 per cent, more than a third of your original contribution.

“If you can, contribute up to the concessional limit,” says Ms Lander.

The cap for non-concessional contributions, which are made after tax, is $180,000, any amount contributed to super above this is taxed at a rate of 46.5 per cent.

test-superannuation1Check out our guide on how much you need to retire at 65, or check the MoneySmart superannuation calculator to see if you are on track.

High income earners

Those who earn over $300,000 a year and make voluntary contributions to super face a hefty double contribution tax of 30 per cent.

But Ms Lander says that going over the concessional salary sacrifice cap can be beneficial.

“It’s not entirely the end of the world to exceed the concessional cap, because you’re still getting the money into a concessionaly taxed environment, but you will have to pay additional tax to get it there.”

Those looking to make a non-concessional after tax contribution to their super of more than $180,000 can do so, by bringing forward up to three years worth of contributions – this means they would not be able to contribute anything for the following two years.

According to, if you want to make a lump contribution the maximum over three years is $540,000, which could be useful after the sale of a property or another asset which you want to turn into super.

Super tips

Your salary sacrifice isn’t enough

thenewdaily_210714_asx-superannuationWhile the guaranteed super contribution is 9.5 per cent, CareSuper’s Ms Lander says that the consensus for salary sacrifice is that it should now be around 15 per cent, especially for women who are more likely to take time out of work.

“I think 9.5 per cent, even 12 per cent is not necessarily enough, given the longevity statistics and the fact that not many people actually work non-stop to age 65 or 70,” she says.

Invest your tax return

AustralianSuper Group Executive Service and Advice, Shawn Blackmore, says that investing your tax return into super could boost retirement savings by 30 per cent.

“A key finding of the survey is that, on average, Australians expect to get back $2,370 from their tax return in this financial year, a significant increase in expectation to last year’s result,” Mr Blackmore said.

“Boosting super savings by investing your tax return each year could lead to significantly improved retirement. Some people could increase their final retirement savings by more than 30 per cent, or by nearly $150,000.”