Getting the most out of your super

How to ensure you don’t miss any eligible superannuation benefits.

It seems like super is constantly in the media, whether it be due to new rules, changes to existing rules or just political parties running proposals up the flagpole. The only thing that is certain is that changes will always be with us, so it is important to keep up-to-date with the latest developments and how they may affect you.

Let’s look at some of the major ones here, as well as a refresher on some of the existing opportunities that you may not already be taking advantage of.

The Super Guarantee

Since 1992, the Super Guarantee scheme has been in operation to provide a baseline compulsory employer contribution amount to help working people to fund their retirement. The percentage has increased over the years and reached 9.5 per cent in 2014.

Since that increase, however, the government has legislated to delay any further increase for another 5 years and it will not increase any more until July 2021, when it will edge up to 10 per cent. At 9.5 per cent it is hardly sufficient to create a comfortable retirement lifestyle, so this delay in its increase makes it more important for workers to consider their own personal additional contributions to ensure adequate funding for their retirement.

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By 2023 the eligibility age for age pension is planned to increase from 65 years up to 67 years

Age pension qualification

There was certainly a lot of hoopla surrounding this issue over the last couple of years. There is no doubt the government is concerned about the increasing proportion of the population who are reaching age pension age and the pressure this is putting on the budget. The current intention is for the eligibility age to increase gradually from the current age of 65 up to 67 by 2023.

Proposals to extend this increase up to age 70 by 2035 were hotly debated when announced by the current government in 2014. The backlash since then has seen this proposal shelved for now, but it certainly hasn’t been ruled out altogether and it may well reappear if political conditions change.

Existing age pensioners will not be affected, but anyone approaching retirement age should keep an eye on this as it may have a major effect on their retirement planning.

Current concessional contribution caps

Any super guarantee contributions, salary sacrifice contributions or other contributions which are eligible for tax deductibility have an annual cap placed on them. Anything contributed over the cap will be subject to penalty tax.

These caps are important to take note of if you are approaching retirement and are topping up your super. The current concessional cap is $30,000 for the 2015/16 tax year, but if you’re aged 49 or older on the 30 June 2015, then the cap is $35,000 a year.

While these caps have not changed in the last couple of years, they have been known to do so in the past, so keep tabs on them so that you are not hit with penalty taxes because you contribute too much.

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Keep tabs on caps when making contributions to your super as they may change

Don’t miss out!

Many people may be unaware of some of the tax incentive schemes that have been around for some time, which are designed to encourage superannuation savings. This includes:

  • Anyone who makes an after-tax contribution to their super fund, and who earns less than $35,454 in the 2015/2016 financial year is eligible for a co-contribution from the government of 50 cents for every dollar they contribute, up to a maximum of $500. The rate of co-contribution scales down if you earn above that amount and eventually cuts out once you earn $50,454 a year.
  • If you have a non-working or low-income spouse and can make a super contribution for them, you may qualify for an 18 per cent tax offset on contributions of up to $3,000. This equates to a maximum rebate of $540. This rebate rate reduces if the spouse is earning some income and eventually cuts out once their income reaches $13,800.
  • Self-employed people can claim a deduction on personal contributions up to the concessional contribution cap mentioned above.
  • Employees can arrange with their employer to make salary sacrifice contributions, which simply means diverting some of their before tax income into super to avoid paying income tax on that amount.

With super concessions being a hot topic politically, who knows how long some of these incentives may last? It is therefore vital that you take advantage while you still can and consult a professional financial planner if you’re unsure of what you may be missing out on.

Have tax concessions made a difference to the way you structure your super? Share your thoughts below.