Strategies to rebuild super after early access

If you've accessed your super early due to COVID, there are a number of strategies that can help you get your super back on track when the time is right.

3 strategies to rebuild your super 

There are three key strategies that could help you boost your retirement savings between now and retirement. 


1. Allocate some of your pre-tax salary to super

 Who could this work for?

This may be appropriate for those who have sufficient cashflow to divert some of their pre-tax salary to super (before it hits your wallet for spending). It doesn’t need to be a large amount to start and you can further increase the amount that you contribute in the future once things are back on track.

 Strategy at a glance

If, and when, the time is right, you may be able to arrange for your employer to contribute some of your future pre-tax salary, wages or bonus directly into your super fund—this is called a salary sacrifice contribution.

By making regular additional contributions to super, you’re helping build up your account balance again. Don’t be afraid to start small if it is all you can commit—even small incremental amounts add up over time. The sooner you can start making even small contributions, the better. Salary sacrifice contributions are made from your pre-tax salary which can be a great, disciplined way to save for retirement. Super is also a long term investment, so, the younger you are when you start saving for your retirement, the more time you’ll have to benefit.

 Important information to consider

Salary sacrifice contributions count towards the concessional contributions cap. Concessional contributions include employer contributions (also known as super guarantee) and personal contributions claimed as a tax deduction. Breaching the cap may lead to additional tax penalties.

Also, salary sacrifice contributions are generally taxed at the concessional rate of up to 15%1  rather than your marginal rate, which could be up to 47%2 . Depending on your circumstances, this strategy could therefore reduce the tax you pay on your salary and wages by up to 32%.

Get started with boosting your super

2. Make a spouse contribution and receive a tax-offset

 Who could this work for?

Members who are in a couple, where one spouse earns less than $40,000 a year and there is capacity to make a super contribution on behalf of a spouse.

 Strategy at a glance

If you make an after-tax contribution into your spouse’s super account and they earn less than $40,000 a year, you may be eligible for a tax offset of up to $540. To qualify for the full offset of $540 in a financial year, you need to contribute $3,000 or more into your spouse’s super account and your spouse must earn $37,000 a year or less3.

A lower tax offset may be available if you contribute less than $3,000 or your spouse earns more than $37,000 a year but less than $40,000.

Spouse contributions can be a great way to grow your super as a couple and to be rewarded via a tax offset for saving for retirement.

 Important information to consider

A spouse contribution counts towards your spouse’s non-concessional contribution cap and must be within this cap to entitle you to the tax offset. 


3. Make personal contributions and claim a tax deduction

 Who could this work for?

Unlike salary sacrifice contributions, personal contributions can be made with your take home pay or savings. You can do this regularly or wait until the end of financial year which could provide greater flexibility and planning options if you have irregular income or expenses.

 Strategy at a glance

You could make a personal contribution and claim a tax deduction for the amount (turning it into a personal deductible contribution). This could help to reduce your assessable income and manage your tax liability. The contribution will generally be taxed in the fund at the concessional rate of up to 15%4, instead of your marginal tax rate which could be up to 47%5.

Depending on your circumstances, this strategy could result in a tax saving of up to 32% and enable you to increase your super. You could put some or all of these savings towards making even more super contributions in the following year.

 Important information to consider

These contributions are treated as concessional contributions and count towards your concessional contributions cap. Exceeding your cap may result in significant tax penalties, therefore, it is important you consult your financial adviser or a specialised tax adviser before making any decisions. 


Get a Government top up to your super contributions

You may also be eligible to apply for the Government’s co-contribution super measure, where the Government may contribute up to a maximum of $500 to the super accounts of people who meet certain criteria.

To be eligible, you must be able to answer yes to all of the following:

  • you've made one or more eligible personal super contributions to your super during the financial year
  • you pass the income threshold test and the 10% eligible income test
  • you’re less than 71 years old at the end of the financial year
  • you didn’t hold a temporary visa at any time during the financial year (unless you’re a New Zealand citizen or it was a prescribed visa), and
  • you’ve lodged your tax return for the relevant financial year.

It is also important to note that you’re not entitled to a Government co-contribution for any personal contributions you’ve made that have been allowed as a tax deduction or a contribution made for you by a spouse.


Next steps

Even small, regular contributions can help getting your super savings back on track for retirement. Depending on your cash flow, financial commitments and personal circumstances, there are many ways that you can restore your super balance.

To find out if these strategies are right for you and to understand more about the rules and eligibility conditions, we recommend you speak with your financial adviser.


Further reading


Important information and disclaimer

This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. The information in this article is current as at January 2021 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. In some cases information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way. Subject to terms implied by law and which cannot be excluded, NULIS does not accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication. Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market.

1Individuals with income above $250,000 will pay an additional 15% tax on salary sacrifice and other concessional super contributions within the cap.

2Includes Medicare Levy.

3Includes assessable income, reportable fringe benefits and reportable employer super contributions.

4Individuals with income above $250,000 in 2019/20 will pay an additional 15% tax on personal deductible and other concessional super contributions.

5Includes Medicare Levy.