November 20, 2023 | 6 min read
Summary: While salary sacrificing into super isn't the right choice for everyone, it can be a powerful tool in building a more secure and comfortable retirement. Start by understanding your financial goals, exploring the current contribution caps, and consulting with a financial expert to determine if this strategy is worth pursuing for you.
We're all familiar with the concept of super. It's that portion of our salary that employers are required to contribute to a super fund on our behalf, with the goal of providing us with financial security in retirement.
But what not everyone is aware of is that relying solely on your employer's contributions might not be enough to ensure a comfortable retirement. That's where salary sacrificing into super comes into play.
Here, we'll explore the ins and outs of salary sacrificing into your super and help you determine if it's worth considering as part of your financial strategy.
Salary sacrificing into super involves redirecting a portion of your pre-tax salary into your super fund. Instead of receiving this portion as part of your take-home pay, it goes straight into your super account.
Here's how it works:
Now that we’ve covered the basics of salary sacrificing, let's explore the benefits of this strategy:
While salary sacrificing into super offers numerous advantages, it's essential to consider some factors before taking the plunge:
Now that we've examined the pros and cons of salary sacrificing into super, the question remains: is it worth it for you?
The answer depends on your individual financial circumstances and goals. Do you have outstanding debts or immediate financial needs that should take priority over extra super contributions? It's crucial to have a solid financial foundation before diverting funds into super.
For many Australians, especially those who can afford to do so, salary sacrificing into super can be a highly effective way to boost retirement savings, enjoy tax benefits, and secure long-term financial stability.
Higher-income earners tend to benefit more from salary sacrificing due to the potential for substantial tax savings, but the benefits are not exclusive to that income bracket.
It is sensible to strike a balance that suits your overall financial plan and to stay informed about any changes in legislation or contribution caps. As your financial circumstances are unique to you, consider seeking professional advice to help you make the best decision for your future.
*Based on KPMG Super Insights 2023 Report as at May 2023 KPMG Super Insights 2023 Report
As one of the largest super providers in Australia,* we’re focused on delivering competitive returns, so your money continues to grow. When it comes to support, we go the extra mile— providing general super advice at no additional cost.
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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. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at November 2023 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 personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at mlc.com.au. 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. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.