Superannuation Contributions Calculator

Assumptions and disclaimer

Disclaimer

This calculator is intended to provide illustrative examples based on stated assumptions and your inputs and is not intended to be used as a substitute for professional financial advice. The calculator is not intended to be relied on for purposes of making a decision in relation to a financial product, including a decision in relation to a particular product, fund or strategy. Actual outcomes will depend on a range of factors outside the control of Australian Retirement Trust.

This calculator is intended to illustrate the potential effects of different levels and types of contributions only, and does not take into account such factors as, for example, the effect different investment options can make to your retirement outcomes, or fluctuations in investment returns over time. It also does not take into account whether you have a spouse/partner, (or any spouse/partner contribution strategies), or any assets outside superannuation or income other than your salary.

The assumptions used in this calculator are reasonable for the calculator’s purpose. This includes:

• assumptions based on current tax and super laws, which are consistent with relevant legislation,
• assumed investment returns which are set by Australian Retirement Trust’s Actuary based on our expectations for our default investment options, and
• assumptions regarding inflation and the cost of rising living standards, which are set by Australian Retirement Trust’s Actuary at a level deemed appropriate.

However, you need to keep the purpose of the calculator in mind, and remember that it is not intended to be relied upon for the purposes of making a decision about your superannuation.

You should get financial advice tailored to your circumstances and consider the relevant Product Disclosure Statement, before making a decision to acquire or continue to hold any financial product.

Tax

The calculator is based on the income tax rates for Australian residents for the 2021/22 financial year. The rates include the Medicare levy, the Low Income Tax Offset and the Low and Middle Income Tax Offset.

The calculator does not take into account other items such as the spouse contribution tax offset and the surcharge for private health insurance.

Contribution tax of 15% is assumed to apply to employer contributions and other before-tax contributions, unless your income (including employer and all other before-tax contributions) is over $250,000, in which case an additional 15% tax is applied to before-tax contributions in excess of this threshold.

Contribution caps

Before-tax contributions (employer contributions, salary sacrifice contributions and after-tax contributions for which a tax deduction is claimed) and after-tax contributions are limited by the respective contributions caps. For 2021/22 the concessional contributions cap, which applies to before-tax contributions, is $27,500. The calculator limits the amount of before-tax contributions to this before-tax cap and does not take into account “catch up” concessional contributions (where, subject to meeting certain conditions, unused portions of the cap from prior years can be rolled over and used in future years).

For 2021/22, the non-concessional contributions cap, which applies to after-tax contributions, is $110,000. If you are under age 67, you will have a personal transfer cap up to $1.7 million on the total amount you can have in one or more superannuation retirement pensions like Australian Retirement Trust’s Retirement income account. You can find out your personal transfer cap by contacting the ATO or logging MyGov. The calculator does not take your super balance into account with regard to after-tax contributions.

Government contributions

Eligibility for the Government co-contribution is based on the salary and after-tax contributions you enter and does not consider any other eligibility conditions (like your account balance). The Government co-contribution has been based on the income thresholds for the 2021/22 financial year.

The Low Income Superannuation Tax Offset has been included.

Before-tax or after-tax contributions

The calculator provides an indicative example of whether a user may be better off contributing on a before-tax or after-tax basis, or a combination of both. How it does this is described below.

If the annual salary you enter is below the maximum Government co-contribution eligibility threshold, the calculator will prioritise after-tax contributions, up to the amount necessary to receive the maximum co-contribution based on the salary you enter. Any further additional contributions would then be indicated as before-tax contributions, up to the concessional contributions cap, then after-tax contributions thereafter.

If the annual salary you enter is above the maximum Government co-contribution eligibility threshold, the calculator will prioritise before-tax contributions, up the concessional contributions cap, then after-tax contributions thereafter.

Projected amount at age 67

The projected amount at age 67 is based on the assumptions below. The projected amount is expressed in today's dollars which means the projected amount has been adjusted by a discount rate to express the balances in today's buying power. The discount rate is 3.75% p.a., made up of 2.5% for inflation and 1.25% for the cost of rising living standards.

The projected amount takes into account the legislated increases in the superannuation guarantee (unless you select an employer contribution rate of zero), and assumes that you continue to contribute the selected extra contribution until age 67. The projected amount assumes the extra contributions are indexed at 3.75% p.a. A percentage administration fee of 0.10% of account balance is included. The calculator does not include any fixed administration fee or any insurance premiums this is because it is calculating the potential additional benefit from making extra contributions, and thus only makes an allowance for fees payable on this additional amount. Fixed administration fees and premiums would be payable regardless of any extra contributions.

To reflect an investment allocation that transitions to lower risk investments as users approach retirement, investment returns are calculated as 6.5% p.a. up to age 55, a blend between 6.5% p.a. and 5.75% between ages 56 and 64, and 5.75% p.a. from age 65. All returns are after investment fees and costs and investment taxes.

The projection does not take into account the impact of any additional tax on concessional contributions in excess of the concessional cap after year 1. Where the total before-tax contributions exceed the concessional contribution cap (indexed at 3.75% p.a.), the projected amount assumes that the additional tax payable is paid in the income tax environment and not deducted from super.

More income in retirement

The estimate of income in retirement is based on the projected amount at age 67, calculated as described above. It does not include the age pension or any investments you may have outside super.

The estimate of income in retirement represents annual income you could have each year so that you use all your superannuation over 25 years, that is, by age 92.

The total income in each year has been indexed annually at 2.5% per annum.

Investment returns in retirement are calculated at 5.75%, plus an adjustment of 0.6% per annum for the fact there is no investment tax in the retirement pension phase. Where the account balance would exceed the “transfer balance cap” ($1,700,000 from 1 July 2021), earnings on the amount in excess of the cap do not include the adjustment, as such amounts would normally remain in the accumulation phase, where investment tax applies.

Age pension considerations

This calculator does not take into account the age pension, however, the amount you have in super, and how you choose to take your super (in a lump sum or as a regular income) could affect your eligibility. You should keep this in mind when planning for retirement, and consider getting advice from a licenced financial adviser.