How to grow your super with extra contributions
Published 24 February 2021
If you are working, your employer regularly pays into your superannuation. Generally, they are required by law to pay 9.5% of your salary into your super¹.
You may also be benefiting from additional employer contributions as part of your salary package.
Your employer’s contributions can help you to grow your retirement savings over the long-term. But is this going to be enough to fund a comfortable lifestyle after you stop working?
It may be worth considering other ways to put money into your super. This article explores the different ways that you can give your super a boost.
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 $37,000). If this is the case for you, then salary sacrificing could help reduce the amount of tax paid while growing your super account.
If you are interested in setting up a salary sacrifice, talk to your workplace’s HR or payroll team. For further information, you can refer to our salary sacrifice info sheet or call us on 1800 444 396.
Personal contributions
You can grow your super by making personal contributions. This is money you choose to pay into your super from your after-tax income – they are also referred to as non-concessional contributions.
There are limits to how much you can contribute in this way during the financial year. We explain more about contribution caps later in this article.
Anyone aged 66 years and under can make personal contributions into super. People aged 67 to 74 years can pay into super if working at least 40 hours over a consecutive 30-day period in the financial year.
For further information, you can refer to our ways to grow your super info sheet or call us on 1800 444 396.
You may be entitled to a tax deduction for personal contributions – refer to our tax deduction for personal contributions fact sheet.
Additional employer contributions – are they before or after tax?
You may be benefiting from additional employer contributions as part of your salary package, on top of your 9.5% Superannuation Guarantee.
If you are, it’s worth checking if your employer is making these contributions before or after tax.
Everyone’s situation is different, and the most tax-effective approach will depend on your salary level. Finding the best way to receive additional contributions could make it quicker to grow your super.
If you need to discuss your additional employer contributions, contact your HR or Payroll team, or call LGIAsuper on 1800 444 396.
Other contribution types
Here are some other ways of making additional contributions into super:
- 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 growing your partner’s super.
- Government support for low and middle incomes
The Australian 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 65 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.
Watch out for your contribution caps
There are annual limits to how much you can contribute to your super. 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:
- Concessional contributions cap – your limit over the financial year for contributions such as employer contributions and salary sacrificing.
A concessional contributions cap of $25,000 per annum applies to all individuals, regardless of age.
Each financial year (since 2018/19), you may be able to ‘carry forward’ any unused amounts under your cap into the next financial year – as long as your total superannuation balance was less than $500,000 at the end of the previous financial year. These carried forward amounts will expire after five years.
- Non-concessional contributions cap – your limit over the financial year for after-tax contributions, such as personal contributions using money which has already been taxed.
Non-concessional contributions are capped at $100,000 per annum. Individuals with a superannuation balance of $1.6 million and more are not eligible to make non-concessional contributions.
If you are aged under 65 years, you can ‘bring forward’ the next two years’ non-concessional contributions, providing your total superannuation balance at 30 June of the previous year was less than $1.4 million. This means you can contribute up to $300,000 over three years.
Further information about both types is available in our contribution caps info sheet.
During the financial year, we recommend you check that you are staying under your contribution caps.
The quickest and easiest way to check your contribution caps is to log in to Member Online. Your account will display your contribution totals and caps for the financial year.
Alternatively, you can contact us on 1800 444 396, and we can provide this information to you.
Further information and advice
Details about all these additional contributions are in our ways to grow your super info sheet.
Our team of superannuation specialists and financial advisers can also help you discover the best way to grow your savings.
We offer our members Super Health Check appointments over the phone or video call, at no additional cost. We look at your superannuation account, discuss different ways to grow it, and check that you are on track for a comfortable retirement.
Our financial advice service² can help you plan for a better financial future. LGIAsuper members can receive limited advice on a single topic related to superannuation, such as salary sacrificing. More comprehensive financial advice is also available, and fees will vary depending on the type and complexity of advice.
Call us on 1800 444 396 to discuss the type of appointment that would suit you best.
- Superannuation Guarantee (SG) legislation generally requires employers to pay 9.5% of an employee’s salary into their superannuation if they are aged 18 years or over, and they earn more than $450 in a month. This also applies to anyone aged under 18 years who is working more than 30 hours a week.
LGIAsuper has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of LGIAsuper. LGIAsuper Financial Advisers are Authorised Representatives of IFS.
- Additionally, LGIAsuper has also engaged Link Advice Pty Limited ABN 36 105 811 336, AFSL 258145 to provide LGIAsuper members with access to limited personal advice over the phone in respect to LGIAsuper products.
