Couple standing in front of a sold house

SOLD on the idea of retiring with more super?

 

Who wouldn't like to retire with a little bit (or a lot) extra in your super account?Here are some ways which you could retire with more. It's never too late to start. 

 
 
  • Salary sacrifice contributions to super are made before-tax (they’re also known as ‘concessional’ superannuation contributions.)

    With your employer, you may be able to arrange to ‘sacrifice’ part of your normal salary (before tax) to be paid directly into your super. Not only is this a convenient way of setting up regular additional super payments, but may also offer tax advantages. These pre-income tax contributions are usually taxed at 15%, rather than at your personal tax rate (up to 45%). Look what a difference they could make:

    Vol cons campaign 2021_30years_50years

    *Assumptions Age (20 years and 50 years): Current Balance $30k. Annual Salary $70k. Retirement Age 67. Salary Inflation (p.a.) 3.0%. SG Contributions 10%. Net Investment Return (p.a.) 5.5%. Annual Inflation Rate 2.5%. Admin Fee (p.a.) $85.80. Asset Based Admin Fees (p.a.) 0.25%. Tax Rate - Contributions 15.0%. The projected amount is shown in today’s dollars. In years with negative returns, there will be no earnings to reinvest.  Please note, this diagram is for illustrative purposes only. 

     
     

    How to salary sacrifice:

    1.  Check with your employer if you can salary sacrifice

    2.  Calculate how much and how often you would like to make contributions

    3.  Get financial advice to make sure salary sacrifice is right for you

    4.  Complete a salary sacrifice agreement form and pass it onto your employer to complete.

  • You can make regular, or one-off extra contributions after-tax from your normal take home pay. This is not usually taxed, as you’ve already paid the tax on the income. You may consider this after receiving a bonus, commission cheque, inheritance, or from selling shares or property.

    The current maximum you can contribute (concessional contributions) is $25,000 per annum (rising to $27,500 in 2021-22).

    Concessional contributions are made from:

    • 9.5% Super Guarantee (SG) payments made by your employer (rising to 10% in 2021-22).
    • Salary sacrifice (if you are doing this).
    • Extra after-tax contributions (check below if you are eligible to claim a tax deduction).

    You're eligible to claim a deduction if you:

    You can make additional contributions over the $25,000 p.a threshold, (rising to $27,500 in 2021-22) however these may be subject to additional tax. 

    How to make an after-tax contribution  

    Make regular, or one-off, after-tax contributions by the following ways. 

    Online - quick and easy

    Login to access your BPAY details and reference number to make a one-off contribution, or set up a regular direct debit.  

    It's important to consider other debts you may have before making a decision to add to your super. 

    Download forms

    Alternatively, download and complete the below After-Tax Contribution Form, for a one-off contribution, or download and complete the Direct Debit Form for regular contributions. 

    Send completed forms back to us at admin@reisuper.com.au

  • If you earn less than $54,837 p.a.* and make a personal contribution into your super, you may be eligible for the Government Co-contribution, and receive up to $500 extra into your super each year. Co-contributions are paid directly into your account after you’ve lodged your tax return for that year, provided your super fund has your Tax File Number (TFN.)

    Your total income Your contribution Co-contribution
    up to $39,837 $1,000 $500
    $44,837 $600 $300
    $54,837 or more Any amount None

    *Assessable income, plus reportable employer super contributions, plus reportable fringe benefits for the 2020/2021 financial year.

  • If you have a total super balance of less than $500,000 from the previous financial year, you can carry-forward any unused concessional caps on a rolling 5-year basis.

    This means if you don’t contribute the maximum annual allowable amount into your super, you can increase your contributions in following years by those unused amounts (for a maximum of five years, after which they will expire) by using the carry-forward rule. 

    This rule applies from 1 July 2018. This means that the 2020 financial year is the first year in which you can top-up your super contributions by the carry forward amount. 

    Annual concessional contribution caps (or limits):

    Financial year   Contribution cap
     2018 - 2019  $25,000
     2019 - 2020  $25,000
     2020 - 2021  $25,000
     2021 - 2022 onwards  $27,500
  • Those under 65 years old can bring forward future annual non-concessional (after tax) contributions cap entitlements, based on their total superannuation balance as at 30 June the previous financial year. This could mean up to $300,000 – or three times the current $100,000 annual non-concessional contributions cap – into your super in one financial year.

    Annual non-concessional contribution caps (or limits):

    Financial year  Non-concessional contribution cap
     2020 - 2021 $100,000 
     2021 - 2022 $110,000 

    Amounts over the non-concessional cap are taxed at 47% for the 2020–21 financial year. Essentially, those who use the rule are ‘bringing forward’ their next two years of caps into the current year. 

    It’s worth noting, if you trigger the bring-forward rule, the concessional contribution cap for the financial year that it was triggered will still apply, even if the following year (e.g. 2021-22) the concessional contribution cap increases. 

How will additional contributions help?

For further advice call 1300 13 44 33

Not a member of REI Super?

Actual investment earnings may differ from the projected earnings in this communication. You shouldn’t rely on the projection or the information for the purposes of making a decision about a financial product, including a decision about a particular product, fund or strategy. REI Superannuation Fund Pty Ltd ABN 68 056 044 770, AFSL 240569, RSE L0000314 Trustee of REI Super (ABN 76 641 658 449), RSE R1000412 disclaim all liability and responsibility to anyone who relies, or partially relies on information or projections in this communication. In presenting this information REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions and consider talking to a financial adviser before making an investment decision. Past performance is no indication of future performance. This information has been prepared and published by REI Superannuation Fund Pty Ltd ABN 68 056 044 770 RSE L0000314 AFSL 240569. REI Super ABN 76 641 658 449 and RSE R1000412 MySuper unique identifier 76641658449129 for the general information of members of REI Super. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. The REI Super Helpline and the REI Super website are provided by Mercer Outsourcing (Australia) Pty Ltd ABN 83 068 908 912 and Mercer Financial Advice (Australia) Pty Ltd (MFA) ABN 76 153 168 293, Australian Financial Services Licence (AFSL) #411766. June 2021.