Interesting fact isn’t it? More importantly, making additional contributions into super doesn’t have to break the bank.

There are a number of ways to make additional contributions. What works for you may depend on your income, time to retirement and overall financial situation.

• Government co-contributions: If your total income is less than $61,920 p.a. (including assessable income and reportable fringe benefits) you may be eligible for some help from the Government through the Co-contribution scheme.
  
  The Government may contribute up to $1.00 for every $1.00 of after-tax contributions you contribute to your super, up to a maximum of $1,000 each financial year.
  
  
  

  Let’s look at a case study to see how this could work.
  
  

• Salary sacrifice contributions: This is an arrangement which involves contributing a certain amount of your regular salary, bonuses or any allowances you may receive from your employer, into your super, before-tax.
  
  Salary sacrificing may have some additional benefits such as potentially lowering your taxable income.
  
  
• After-tax contributions: This involves contributing a certain amount to super from an after-tax income at regular intervals or as one-off payments.
  
  The beauty of contributing the same amount at regular intervals means that ‘dollar cost averaging’ can be achieved, where you buy more units when the unit price is low and less units when the unit price is high.
  
  Essentially, your total cost is averaged, often providing you with more units than if you tried to pick the market.
  
  
• Spouse contributions: If you have a spouse, you may be able to establish a super account on their behalf and/or make contributions into their account.
  
  As well as building a retirement nest egg for your spouse there are a range of potential tax benefits.
  

Assumptions

¹ Assumption: Based on a male aged 30, with a $20,000 super balance earning $50,000 p.a. If one cup of a coffee a day (costing $3.50) was given up and paid into super each year (approximately $1,280 p.a.) until retirement (at age 65). Invested in a balanced portfolio with an earning rate before management costs and tax of 8%. Fund fees consist of a management cost (% of accumulation) of 0.55%, $52 management fees p.a. and $78 insurance premiums p.a. Assuming contributions are paid monthly and Government co-contributions are included.
Source: http://www.asic.gov.au/fido/fido.nsf/FIDO%20CalcW?
readForm&title=Super%20calculator

Disclaimer

Important information
An interest in the Plum Superannuation Fund ABN 20 339 905 340 (Fund) is issued by PFS Nominees Pty Ltd ABN 16 082 026 480 AFSL 243357 (Trustee). The Fund administrator is Plum Financial Services Limited ABN 35 081 812 731 AFSL 243356 (Administrator). This material has been prepared by the Administrator and it contains information that is general in nature. The information does not take into account your objectives, financial situation or needs. Before acting on the information you should consider whether it is appropriate having regard to your personal circumstances and seek professional advice. The Administrator recommends that you consider the Fund’s Product Disclosure Statement (PDS) before you make any decisions about your superannuation. To obtain a copy of the Fund’s PDS, please contact a Plum Member Services Consultant on 1300 55 7586.

Neither the Administrator, the Trustee, nor any other company in the National Australia Group of companies accepts liability whatsoever for any decision that is made on the basis of or in reliance of the information contained in this material. Please note that the information contained in this material is current as at September 2009. Any changes in the law or policy subsequent to this date have not been incorporated.

© 2009 Plum Financial Services Limited ABN 35 081 812 731 AFSL 243356 (Administrator).
® Registered to BPAY Pty Ltd ABN 69 079 137 518.

Susan is 40 years old, earning $27,000 each year. She has no other taxable income and wants to invest an extra $1,000 each year from her after-tax salary.

If she made a super contribution, the Government would invest an additional $1,000, so her total investment in year one is $2,000.

Let’s look at the impact this could have on Susan’s super account over 25 years, compared to investing the $1,000 outside the super environment.²

As you can see, there's a potential difference of $48,000 in super savings.

To automate your salary sacrifice or after-tax contributions and achieve dollar cost averaging, please contact your HR or Payroll representative.