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Retire earlier: Superannuation contribution strategies

3 July 2024

In this Super Insider episode, we’ll cover how you may be able to retire earlier by adding extra money to your superannuation. Our experts will explain the different types of super contributions. Discover how small contributions can lead to significant growth, ways you may be able to reduce your taxable income and how the government co-contribution scheme supports low-income earners. You’ll also learn how downsizer contributions work, and why you might want to split your super with your spouse.

Here's what’s covered:

  • What is the Super Guarantee?
  • What are before-tax contributions?
  • What are after-tax contributions?
  • What's the Federal Government co-contribution?
  • What are downsizer super contributions?
  • What are spouse super contributions?
  • What’s super splitting?
  • Where can I get more information?


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ATO guidelines on concessional and non-concessional contributions

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Kane: Well, hello, everyone, and thank you for joining us. Welcome to Australian Retirement Trust's Super Insider podcast. Today's topic is investing in your superannuation.  
So, how do I get money into super? What types of contributions can I make? Putting money into super can make a big difference, even if it's a small amount over a long period. Your superannuation grows not only by the amount you're putting into your super account but also by the money you invest, attracting growth over time. So, your money's growing by the money you're putting in, but it's also getting that growth over the long term. It can make a big difference, so it's a very important topic.  

Now, why should I put the extra money into super? What's it going to do for me? It could reduce my taxable income. It could help me retire sooner because I've done so well. I've put extra money aside; I can enjoy that retirement much earlier. And it could also mean I've got a better retirement lifestyle. I can go on those extra overseas holidays, upgrade that car, get the new car I want. So, they’re great reasons to consider contributions to your super today.  
My name is Kane Everingham, and I'm joined by my colleague April Smith. We are part of the education team here at Australian Retirement Trust. Welcome, April.  
April: Thank you, Kane.  
Kane: All right. So, April and I get to speak to thousands of people across the country about all things superannuation and retirement. And one of the most common things that comes up is about contributions, like, how do I put money into super? There are a lot of rules and regulations here. So, we will demystify a bit of that today and go through some of the topics. After listening to this episode, I hope you'll have some great ideas to take away and implement in your situation.  

I have to say anything that April and I say today is general advice only. That means we're going to talk about a whole range of things. They may not all be right for you, so please do your homework. You should seek financial advice or consult the Product Disclosure Statement of your super fund to see if this is right for you. Some might apply, but not all will.  
So, April, what can our listeners expect to learn today?  
April: Thank you, Kane. Firstly, I'll talk about contributions in general. Most people might know of contributions as their employer contribution, which is what's called a Super Guarantee amount. This is the amount that your employer must pay into your superannuation account. Currently, for the 2024/25 financial year, this is 11.5%. It will go to 12% in the next financial year. So, the reason we receive this from our employer is so we can live a dignified retirement.  

But we're going to talk about today what we can do to put into our superannuation and grow it. And as you said, Kane, we want to retire earlier. We want to go to the Kimberleys, France, Cambodia, or whatever we want to do and have options. So today, we’ll discuss: 

What before-tax contributions and after-tax contributions are. 

We'll also talk about the home downsizer contribution. 

And then, we want to discuss some strategies you and your partner might want to look at.  

So that's what we're going to be covering today. These contributions will differ for everyone. One might be suited to somebody else. We want to chat about who might belong to these types of contributions, because there is a variety of them. And people may not be aware of which one to choose.  

So, Kane, can I get you to take us away? Firstly, for the tax contributions. What are they? 


Kane: Okay. So, before-tax contributions, or the technical term 'concessional contributions', you might have heard. This is any contribution that goes into your superannuation account and receives a concessional or lower tax rate. That's where the name comes from. So, these are contributions that are then taxed within super, not at your payroll. The most common one is employer contributions, or any salary sacrifice you make to super. They're concessional contributions. Suppose you put money into super and then claim a tax deduction. That's classed as concessional contributions. So, these contributions are taxed at up to 15% in your superannuation, as I said, not taxed at your personal PAYG rate. When you start hitting the higher income tax brackets, there's something to consider. Because as I earn more, I'm getting into those higher income tax brackets. Salary sacrifice can reduce my taxable salary. It could be a great tax-effective way to boost my super and reduce some of my taxes. 
Another reason you might look at tax-deductible contributions is because I might be self-employed. Or I might have a job on the side. I speak to my accountant as I'm approaching the financial year's end; the accountant might say, "Hang on, you're up for a big tax bill” So, there might be a benefit for me to put money into super and claim a tax deduction on that to reduce my taxable position there.  

Another one is a great scheme called the First Home Super Saver scheme. It was set up so that if I'm eligible for this scheme, any contributions I make to my super can help me save for my first home. So, it can be a great tax-effective way to save for my first home.  
So now, with before-tax contributions, I'll stick with that term because it's less of a mouthful than concessional contributions. Just be aware that there is an annual limit. It's just not a free-for-all. For the 2024/25 financial year, the yearly limit is $30,000 per year. And I need to stress that your employer contributions are included. That doesn't mean I couldn’t sacrifice $30,000 myself if I could do so. My employer contributions count toward that $30,000 limit as well.  
So, remember, there is that limit for the 2024/25 financial year of $30,000 a year. However, if my balance is under $500,000, I can carry forward any unused cap from my previous up to 5 years. So, I'll give you an example. So, the limit for the 2023/24 financial year was $27,500.  
Between my employer contributions and my own salary sacrifice, let's say I use $17,500 of that. So, I still have $10,000 from last year that I have yet to use. I'm now in the 2024/25 financial year. I've got my new limit of $30,000 to use, so I can technically use my $10,000 from last year that was unused, plus my $30,000 for this year. I could do up to $40,000 in concessional contributions in the 2024/25 financial year. With anything like that, you can go to the MyGov and ATO sections there and look if you've got any unused caps that could be available to you.  
That's an overview of before-tax contributions. But April, I'll turn it over to you now for after-tax or non-concessional contributions.  
April: Yes, another fancy word, non-concessional. I'll use after-tax because that's what it is – a contribution that goes into your superannuation after applying your income tax. So, as opposed to what you've just mentioned before, tax where they taxed within super, it's already taxed at that income tax or a marginal tax rate. Now, because you’ve already been taxed, the caps are more generous. What you could effectively put into your superannuation per financial year - for the 2024/25 financial year - is $120,000. You can regroup or do 3 years at once. So, combine all your 3 years, putting in $360,000 at once. I did mention that this is a 2024/25 financial year, so these figures may have changed depending on when you're listening to this podcast.  
And because we are putting this large amount into superannuation, I also want to highlight eligibility considerations. It will depend on your age as to whether you can make those contributions or not. It will also depend on your balance in your superannuation. And these funds are going into superannuation. So, superannuation is there for your retirement. So, generally, to be able to access those funds, you need to be over 60 years old. And whether you're retired or still working, there might be either a part amount you can access or the full amount you can access.  
But let's see who’s going to be putting in these after-tax contributions. So, maybe you've sold an investment property, you've sold some shares, you've received an inheritance. But more often than not, I've spoken to many people with funds just sitting in a bank account. And what they really want to do is put those funds into superannuation so that they can take advantage of that compounding effect over time. So, they wanting to ensure those funds grow, or fluctuate over time. But ultimately get that growth over a long period of time on those funds.  
Now, those after-tax contributions. I've spoken to you about more considerable funds going into your superannuation. But I also want to talk about the benefits of just putting a little spare change into your super. I remember speaking to this lady; she used to come into Ground Floor when I used to work on Ground Floor, and she'd come in every fortnight, and she'd give me $3.30, or she'd give me $20.50. It was all very specific. Sometimes, she might have had $50 and all those amounts that went into her superannuation. She was trying to put up to $1,000 into her superannuation. And the reason is that she was working casually. So, as a lower-income earner, if she puts $1,000 into her super, she is entitled to government co-contribution, where the federal government would put $500 into her super. That's an incentive where you get about a 50% guaranteed return on your money. But you need to be a lower income earner to be eligible to receive that. A part-time or casual employee might be more suited to this. In the 2024/25 financial year, if you earn under $45,400, you may be entitled to a total of $500. But suppose your income is under $60,400. In that case, there may be a sliding scale for eligibility and how much you can receive from the government co-contribution. So, they're the types of contributions you want to use to put in a large amount, or just put those small amounts in to get that government co-contribution.  
But let's talk about another contribution now. What's the home downsizer contribution? What if I sell my house? What if I don't have a superannuation account? Can I open one later in life?  
Kane: So, the government has what's called the downsizer scheme, or we call it the home downsizing scheme. So, what the government was trying to do with this scheme was that it's designed for older Australians. I'm selling my larger family home and downsizing to a smaller, cheaper one. And I can effectively put some of the sale proceeds into my superannuation. That could be a significant boost for people without much super; the family home is their biggest asset.  

I'll pick on myself as an example. My wife and I have 2 young boys, so we've got a larger family home. We've got a yard for the boys to run around in. But we won't need that when the boys have grown up and flown the coop. So, we're a perfect example of this scheme, where we would be looking to downsize because I don't want to do the yards all by myself. So, we will downsize it to something smaller and cheaper. And then I've got access to extra capital to help fund my retirement. So, under the current rules, if I'm over 55, and the home was owned by my spouse or me for 10 years or more, then I've got 90 days from the date of settlement to put up to $300,000 of those proceeds into my superannuation account. If my partner or my spouse is over 55, we can do $300,000 each. That could be up to $600,000 from the sale proceeds we could put into our superannuation. So, some pretty cool things about home downsizer contribution. It doesn't count towards those contribution caps that April and I spoke about earlier. There's also no upper age limit. Once you reach age 75, you cannot voluntarily contribute to super. So, the downsizer contribution provides older Australians with a great opportunity there. The big thing to be aware of with this strategy, though, is that it can have an impact on the age pension.  
Your home is assessable by Centrelink. But if I sell that house and get extra proceeds and then put them into super, that is assessable for the aged pension, which could impact your age pension eligibility and the amount you're getting. So again, like with anything we've spoken about today, do your homework and get financial advice if you are interested.  
So, look, spouse contributions are another key topic we need to cover, and I'll get you to do this April. That could be another great way to get money into super. So, I'll throw it over to you.  
April: Yes, excellent. We could look at 2 types of spouse contributions. One's called a spouse contribution, and the other is splitting your super and transferring some of your super to your partner's account. I'm going to chat first about a spouse contribution. So, a spouse contribution is simply paying money into your spouse's account. Let's say your spouse is a lower-income earner or not working. You could look at transferring $3,000 into your partner's account, and you can look at claiming up to 18% as a tax offset, which is up to the value of $540. That might be something you want to do. You might be looking to grow your future nest egg for retirement. That's $3,000 going into your spouse's account; potentially, you will receive a tax offset of up to $540.  
Now, I also want to talk about spouse splitting. Spouse splitting means transferring some of your funds into your partner's account. So, you can transfer up to 85% of your concessional contributions or before-tax contributions into your spouse's account. For example, I might have sacrificed $10,000 in employer salary or tax deductions for the year. I could transfer $8500 over to my partner's account. It will still count towards my cap, which is the $30,000 you mentioned earlier. But what I can do is transfer 85% of those funds to my spouse's account. Now, I might consider doing that because I want to be generous. I want to make sure that my partner's super grows, as they may have taken some time off to look after our children or even parents later in life. But there are certain circumstances as to why you might split some of your super to your partner's account. They can be based on your age, like if I want to transfer to an older spouse or if I want to transfer to a younger spouse. Okay, Kane, you're a former financial advisor, and you used to talk to your clients about transferring some of that money to a younger spouse. Now, why would you have done that?  
Kane: So, good question, April. The main thing you want to think about is when you hit the age pension age, wherever you've got your money, it will be assessable. So, if I've put it into an accumulation account or an income account, if it's in the bank, that money will be assessable when I apply for the age pension.  

Now, if I've got a younger spouse, let's say I'm 67. I've hit my pension age, and I'm applying for the aged pension. But I've got a younger spouse under age 67, so they haven't hit the age pension age; anything they've got in an accumulation account in superannuation is not assessable by Centrelink for the aged pension. So, I might, as the older spouse, look to split my super contributions, my concessional contributions, to my younger spouse to build up our retirement nest egg we’ve got in the younger spouse's name. Then, when I apply for the age pension, my younger spouse's accumulation account will not count for Centrelink, so that could maximise my age pension entitlements. When my younger spouse eventually gets to her age pension age, then it would be assessable. But that could make a big difference over a few years, particularly if you also have a significant age gap. So that can be a great thing to think about. Now, I'm going to kick it back to you. But what if we go the other way? Why would there be a reason that you might want to go from the youngest spouse to the oldest spouse?  
April: Yes, okay. So, this is interesting. There are 2 different benefits. Let’s say we've got Hannah and Joe, they’re a couple with a 10-year age gap. Let’s say Joe is age 45 and Hannah is 55. Hannah will look to be able to access her super, potentially retiring at 60. She can look at accessing her super from the age of 60, depending on whether that's the full or the part amount. So, what Joe wants to do is transfer those funds up to Hannah. So, 85% of those funds up. Now, that might be because he wants to retire with Hannah. So, they want a bit more money in those early years of retirement. Another reason might be to pay off the mortgage, go away on holiday, or have those extra funds in the account to do whatever they want. But the caveat is you need to do some forward planning for this one, because you can’t transfer to your spouse's account if they are 60 and retired and able to access that super, or over the age of 65. So, you need good planning if you are the younger spouse looking not transfer to the older spouse. 

There are many different reasons why you choose to split some of your super, whether to an older or a younger spouse. There are also eligibility requirements. Age is one of those requirements. So do some homework. Call your superannuation fund - no questions are too silly. So please, if this has piqued your interest, investigate it more.  
But we've gone through all the types of contributions today that we wanted to talk about. So, what's the key thing we want to leave our listeners with?  
Kane: The earlier you can engage with these, the better. Now look, it's never too late. But the earlier you can do something, the better. Maybe I can only afford to put $20 each pay cycle into super right now. The earlier you start doing that, the more significant a difference it will make because we spoke earlier about the compounding effect and growth over time. So, pay attention as early as you can. Make that decision to do something as soon as possible. Your older you will thank your younger you. 
We have taken you through various ways to put money in your super. And as we've stressed throughout, please make sure when you're thinking about these, if any of them piqued your interest, are you eligible to make that contribution? What benefits or things do you need to consider for your situation? Does that apply? Can I get where I need to go? How do I even make this contribution? This all sounds great, Kane and April, but how do I do it? So, you need to find that out. And then also be aware of those limits and the different rules and regulations. So again, you'll find a lot of great resources online. Your super fund will often have a lot of great articles and helpful facts and figures on its website. You’ve got a lot of places there to help. So, April, where can our members get further guidance and support?  
April: Yes, so, our job is education. That's what we recommend and talk to our members about - educating yourself. There’s so much to learn about super. I've been in super for 12 years, and I'm still learning. So, I can completely understand when people come over to their super fund, they don't even know what questions to ask. So that is what your super fund is there for. They know what may be relevant for you based on your age and salary, but this is also where you would seek financial advice. See if your super fund offers it because, at Australian Retirement Trust, we have advice that's part of your membership. Your super fund might have that as well. That means your super fund can inform you about what you should do. So, as we mentioned before, all these different types of contributions will not be for everyone. But there might be for some people. And what's right for your neighbour might differ from what's suitable for you. So, talk to your super fund. Play around with some calculators on the website. Go to the ATO website, research, and ask for help. Talk to as many people as you want to talk to. But otherwise, it's time to wrap up, Kane.  
Kane: Yes, okay. Well, that's all we have time for today. Thank you, April, for joining us today.  
April: Thank you, Kane and thanks to our listeners as well.  
Kane: April and I hope this has been helpful to you. As always, we'd love your feedback or suggestions for any future editions. Drop us an email and the best way to get us is at If you like the show, subscribing is the best way to support us. There's a link in the episode description so click and subscribe, that way you’ll know when our new episodes come out.  

Thank you so much for listening to Super Insider. We hope you enjoyed it and can join us next time. And as we always like to finish off saying, the best time to do something with your superannuation was yesterday. The second-best time is after you listen to this episode.  

Thank you.  



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