Contribute to super and get more in your pay packet!

7 June 2007

With many Australians set to get a pay increase from 1 July this year as a result of the new personal tax threshold changes, Plum Financial Services is urging its members to consider putting the extra into super before they have a chance to miss it!

According to Plum Financial Services, many Australians will get an increase in their take-home pay from 1 July 2007, when the Government's new personal tax thresholds announced in this year's budget kick in.

And there has never been a better time to contribute to super, with the Government's simpler super changes also taking effect from 1 July, making super a much more attractive savings option, according to Plum's Managing Director Mike Fitzsimons.

Mr Fitzsimons said according to Plum's calculations*, if you earn between $40,000 and $120,000 you can contribute 1% of your salary before-tax into your super and still receive more in your take home pay, than you did last financial year.

'And it gets even better for those earning less than $58,000 per annum, as they may be able to take advantage of the Government's co-contribution scheme as well if they make an after-tax contribution,' Mr Fitzsimons said.

'For most, this increase will be an unexpected windfall in their pay packet, so we are encouraging members to consider putting some of it into super now. You can't miss something you've never had, and it can make a substantial difference to your retirement savings down the track!'

For example, according to Plum's projections*, if an individual on $80,000 per annum invested their salary increase from the tax changes each year over 25 years, a salary sacrifice (before-tax) arrangement could potentially generate an extra $51,000 (in today's dollars) in super, tax-free at age 60.

This is compared to investing after-tax and outside the super environment, which would only generate approximately $29,000 and even then, the monies may be taxable when you withdraw them from your particular investment.

'We are urging all our members to take advantage of this increase and invest it in their savings now before they grow accustomed to seeing it in their pay,' Mr Fitzsimons said.

'As you will see from the attached table, nearly everyone will benefit from the new tax thresholds to varying degrees and super has never been more attractive as a savings option!'

Read the full version of this story - Contribute to super and get more (PDF 29kB).