Easy ways to boost your super

Topping up your employer’s contributions to your super is a great strategy for helping yourself to a comfortable lifestyle in the future, when you’re no longer getting money from paid work.   

Making voluntary contributions to super is probably already on your to-do list. But perhaps you haven’t put your plans into action yet – either because you’re worried you can’t afford to make your own super contributions, or just because it all seems too hard. 

It’s not hard - and it won’t hurt

The good news is that it’s easy to make your own contributions to super – and there are different ways you can do it. Different methods – either before-tax or after-tax - will suit different people. 

As well as getting tax benefits from making some types of voluntary contributions, you will benefit from the power of ‘compounding’. 

What that means is that even if you can only afford to contribute small amounts, over the years, by earning returns on returns, even your small, regular contributions can build on themselves and make a significant difference to your super balance in the long run. 

What kind of SUPERstar are you?

There are two main types of voluntary super contributions: before-tax and after-tax. The best approach for you will depend to a large extent on your income. 

Of course every person’s situation is different though, so you should talk to a licensed financial adviser at your super fund to check which method will be to your best advantage. 

Before-tax contributions (also known as ‘salary sacrifice’ and ‘concessional contributions’)

Before-tax contributions are when you make contributions to your super from your before-tax pay. This can have the effect of reducing your taxable income, which simply means you will pay less tax. 

Before-tax contributions generally work best for people who earn over $37,000 per annum because they pay a higher tax rate than people who earn below that amount. 

You can ask your employer to make before-tax (salary sacrifice) contributions to super on your behalf. They may have a form you can fill out or you can get a form from GuildSuper.  

After-tax contributions (also known as ‘personal payments’ and ‘non-concessional contributions’)

If you earn below $37,000, a year you’re likely to benefit more from after-tax than before-tax contributions because you’re already on a low tax rate for your salary. Also, if you earn under $51,021 you can access the Government co-contribution (see below) for after-tax super contributions you make.

After-tax contributions to super are also a good option if you want to make one-off or less regular contributions. 

You can make after-tax super contributions in the form of a regular payroll deduction that you arrange with your employer. Alternatively you can make after-tax super contributions by cheque or transfer from your bank account by direct debit, or you can make payments with BPAY. 

Your after-tax super contributions could make you eligible to receive Government co-contributions

For every one dollar you contribute to your super from your after-tax pay, the Government will make contributions to your super of up to 50 cents if you earn between $36,021 and $51,021 per year*. 

Under the Government’s Co-Contribution scheme, you can receive a super contribution from the government of up to $500 each year. You’ll get the full $500 if you make after-tax super contributions of $1,000 and your income in the 2016/17 financial year is less than $36,021. If your income is above this level the rate of co-contribution you receive will be lower. 

Take an easy step TODAY to make a big difference to TOMORROW

It’s never too early and it’s never too late to start making voluntary contributions, but the sooner you start, the better position you’ll be in. 

To get the ball rolling, your first stop is your super fund. They are there to help you save and can offer advice, information and calculators to work out a voluntary contributions strategy that’s best for you.
The  GuildSuper range of online calculators can help you see how different levels and types of voluntary contributions could work for you.

To compare how after-tax and before-tax voluntary contributions could work for you, use the Salary Sacrifice and Co Contributions calculator  

For advice on your super– at no extra cost - call GuildSuper on 1300 361 477 

For a wealth of information as well as links to forms and calculators, go to the Boost your super page.

*Thresholds for the 2016/17 year.