Super
11 January, 2023

Start boosting your super in 2023

Looking to grow your super faster this year? It’s time to think about making extra contributions.

A little bit now goes a long way later 

Making regular extra contributions to super is a healthy financial habit that can significantly boost your overall super balance — especially if you start early. 

Super is powered by the magic of compound returns, where the money your super earns is reinvested to earn more. So, the more you put in early in your career, the more time your super has to grow and gain momentum.  

This can mean tens of thousands extra in your account when it comes time to retire.  

The best part is, boosting your super doesn't have to break the bank now. Even putting as little as an extra $10 or $20 each week can make a huge difference. 

How to boost your super 

The two most common ways to make extra contributions are after-tax contributions (money from your take-home pay) and before-tax contributions (such as salary sacrifice). 

Here's how they work … 

After-tax contributions 

Don't let the name fool you, there's nothing complicated about 'after-tax' contributions. 

It's simply money you deposit directly into super from your take-home pay (the money your employer puts into your regular bank account.) 

Because you've already paid income tax on this money, you don't have to pay any additional tax when it goes into your super. Hence the name 'after-tax'. 

There are three ways to make after-tax contributions. 

For one off contributions, you can either transfer money into your super account through BPAY or write a cheque. 

You can find your unique Spirit Super BPAY details in Member Online under the 'contributions' tab. If writing a cheque, make it out to Spirit Super and post it to us with a completed Make a super contribution form.  

If you want to make regular after-tax contributions, it’s best to ask your employer to do this on your behalf. Note, this is different to Salary Sacrifice, which is a type before-tax contribution (see below). To get started, chat with your HR or payroll officer.  

After-tax contributions case study: Sophie 

Sophie is a 25-year-old educator from Launceston.  
Each week Sophie puts an extra $10 into super each week from her take-home through BPAY. 
Over time, these extra contributions super-charge Sophie's super savings, giving her an additional $44,508 when it comes time to retire1.

 

Before-tax contributions 

Before-tax contributions are contributions you make to super from your before-tax pay — that is, before the money goes into your regular bank account. 

The most common form of before-tax contributions is salary sacrifice. This is where you ask your employer to put a bit extra into your super account each pay on top of your standard super guarantee payments.  

Because this 'sacrifice' amount goes directly into super and not your regular bank account, you only pay 15% tax on this money. This is probably a lot less than your regular income tax rate, so you simultaneously save on tax and boost your super. 

Generally, making before-tax contributions is only tax-effective if you earn more than $18,201 a year. If you earn less than this, it may not be your best approach. 

The biggest advantage of salary sacrifice is that it's easy. Simply let your employer know how much extra you want to put in each week, and they sort the rest.  

Then you can relax knowing your retirement savings are growing to their full potential in cruise control.  

To start salary sacrificing, chat with your employer or send your HR or payroll person our salary sacrifice email request template with your details.

Before-tax contributions case study: Jordan

Jordan is a 25-year-old plant operator from Perth. 

After getting a pay rise, Jordan asked his employer to put an extra $20 into his super each week from his before-tax pay.

This will give Jordan over $68,673 extra in his retirement balance when he's ready to retire2. 

 

Know your contributions caps 

Extra contributions are a great way to boost your super, but there are limits to how much super you can save each year. 

These limits are called contributions caps and apply to both before and after-tax contributions. 

If you exceed these caps, you may pay extra tax, so it's worth knowing what these limits are and if they'll affect your super. 

For details, see Contributions caps

 

1 Assumptions based on a person age 25 with a $10,000 super balance earning $50,000 per year with 10.5% super guarantee contributions, administration fees of $68 + 0.15% of the account balance each year, and investment earnings of 8%, tax on earnings of 7% and investment fees of 0.64% each year. Prepared using moneysmart.gov.au Superannuation calculator on 30 May 2022. 

2 Assumptions - based on a person age 25 with a $10,000 super balance earning $50,000 per year with 10.5% super guarantee contributions, administration fees of $68 + 0.15% of the account balance each year, and investment earnings of 8%, tax on earnings of 7% and investment fees of 0.64% each year. Prepared using moneysmart.gov.au Superannuation calculator on 30 May 2022. 
This is for general information only and doesn’t take into account your objectives, financial situation or needs. You should assess your financial position, personal objectives and needs before making a decision based on this information. 

We’re giving you this information in good faith. It comes from sources we think are reliable and accurate. However, we can't guarantee it’s right and don't accept any liability relating to the content or any linked external websites. 

Consider the PDS and TMD at spiritsuper.com.au/pds before making a decision. Issuer is Motor Trades Association of Australia Superannuation Fund Pty Ltd (ABN 14 008 650 628, AFSL 238718), the trustee of Spirit Super (ABN 74 559 365 913). Advice is provided by Quadrant First Pty Ltd (ABN 78 102 167 877, AFSL 284443).