Supercharge your super balance with additional contributions
1 July 2024
While employer contributions form the foundation of superannuation savings, there are numerous strategies you can employ to maximise your retirement savings.
If you are working, your employer regularly pays into your superannuation. Generally, they are required by law to pay 11.5% of your salary into your super (2024/25). They may also be making additional contributions as part of your salary package.
Your employer’s contributions can help you to grow your retirement savings, but is this going to be enough to fund a comfortable lifestyle after you stop working?
If you’d like to grow your super faster or have more money in retirement, you may want to consider other ways to put money into your super.
Additional contributions can be a tax-effective way to grow your super, depending on your personal situation. By boosting your super balance through these contributions, not only can you enhance your retirement savings, but you could harness the remarkable power of compound growth. This means that any returns on your investments are reinvested, which could generate further potential earnings and create a snowball effect of growth. Over the long term this can have significant impact on your retirement savings.
Below are some of the different ways of making additional contributions.
Salary sacrifice
Salary sacrifice is when you and your employer agree to make an additional contribution to your superannuation from your before-tax pay. This type of contribution is taxed at 15% and is also referred to as a concessional contribution.
You may benefit from salary sacrificing if your marginal tax rate is higher than 15%, which typically applies for annual salaries over $45,000). If this is the case for you, then salary sacrificing could help reduce the amount of tax paid while growing your super account.
Over a long period of time, a small amount of salary sacrificing can make a big difference to your super balance when you reach retirement.
If you are interested in setting up a salary sacrifice, you can talk to your employer to see if they can offer this arrangement.
For further information, read our info sheet on salary sacrifice.
Personal contributions
A personal contribution is made using your own money. Because you have already have paid tax on your own money, personal contributions are not taxed when they go into super. This is also referred to as a non-concessional contribution.
If you do make a personal contribution, you may be entitled to claim a tax deduction – for eligibility, refer to the Australian Taxation Office website. While personal contributions are paid from after-tax money, when claimed as a tax deduction they will count towards the concessional contributions cap and be taxed at 15%.
Further information is available in our info sheets:
Update for local government employees only – removal of mandated employer contributions
Permanent local government employees will be able to opt out of making additional contributions on top of their employer’s Superannuation Guarantee contribution from 1 July 2024.
The changes by Queensland Government replace the previous arrangement which required local government employees to make additional contributions of 5% or 6%, depending on their employer, to their super.
Local government will continue to pay the employer contribution to permanent employees which is generally either 12% or 14% depending on your employer.
There will not be any changes to an employee’s additional super contributions unless they explicitly choose to make this change by notifying the payroll department at their employer.
While the option to opt out provides flexibility, continuing to make additional contributions can significantly enhance an employee’s retirement savings.
Find out more: Update on local government additional contributions from 1 July 2024
Watch out for your contribution caps
There are limits to how much you and your employer can contribute to your super in a financial year. These are your contribution caps, and you may have to pay extra tax and a fee if you exceed them.
There are caps for both types of contribution (as of 2024/25):
- For salary sacrifice and employer contributions – the concessional contributions cap is $30,000. You may also be eligible to ‘carry forward’ an unused cap amount from the previous financial year.
- For personal contributions – the non-concessional contributions cap is $120,000 per annum. You may also be eligible to ‘bring forward’ up to three years’ worth of non-concessional contributions in a single year.
For further details including eligibility, refer to our info sheet on contribution caps.
During the year, we recommend you check that you are staying under your contribution caps. The quickest and easiest way to check this is to log in to Member Online. Your account will display your contribution totals and caps for the financial year.
If you have more than one super account outside of Brighter Super, you will need to log in to your MyGov portal to check your contribution caps.
Other contribution types
Here are some other ways of making additional contributions into super. Explanations on how these count toward the contributions cap is provided in the info sheets below.
- Adding to your partner’s super
If you are married or in a de-facto relationship, you and your partner can help grow each other’s superannuation. Find out more about super for your partner.
- Government support for low and middle incomes
The Government can help low and middle-income earners save for retirement in two ways: Super co-contributions; and Low income superannuation tax offset (LISTO). Find out more about super support for low and middle-income earners.
- Downsizer super contributions
People aged 55 years and over can make a super contribution of up to $300,000 from the proceeds of selling their home. Find out more about downsizer super contributions.
No matter how small or large, every additional contribution can help you create a brighter future. If you can afford to do it, why not give your super a boost today?
LGIAsuper Trustee (ABN 94 085 088 484) (AFSL 230511) (the Trustee) as trustee for LGIAsuper (ABN 23 053 121 564) (RSE R1000160) (the Fund) trading as Brighter Super. Brighter Super products are issued by the Trustee on behalf of the Fund. Brighter Super may refer to the Trustee or LGIAsuper as the context may be. This article may contain general advice which does not take into account your individual objectives, financial situation or needs. As such, you should consider whether it is appropriate in light of your own objectives, financial situation and needs prior to making any decision. You should consult a licensed financial advisor if you require advice which does take into account your personal financial circumstances. You should also obtain and consider the Product Disclosure Statement (PDS) before making any decision to acquire any products. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the PDSs and TMDs at brightersuper.com.au/pds-and-guides.
This article contains information that is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to Brighter Super by calling us on 1800 444 396 or by emailing us at info@brightersuper.com.au.
