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Superannuation


Elfie34

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Hi all. I know this topic has been done before on eb but I’ve been mulling over this a bit today. I am on a defined benefits scheme and have a reasonable amount in my super for my age (41).

I am wondering if there is anything I can do to counteract the fact that I have been part time for 10 years, and likely for a bit longer as one of my kids is special needs and I am finding it hard to work longer hours around driving kids to and from appointments and after school activities. I put in 10% contribution which is the maximum. 

I really feel like there is a real disadvantage to part time for retirement savings but I also don’t think my family would cope with the additional stress of me working 5days. 

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Phillipa Crawford

Do you have any ability to salary sacrifice even a small amount to take advantage of the pre tax contribution? This year you can put in 27.5k.

I'm not sure if that's what you mean by the 10%

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The 10% is pretax contribution not a salary sacrifice. I am not even sure if I am allowed to salary sacrifice on my defined benefit scheme

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Ilovethebeach

Effie you can’t salary sacrifice on a defined benefit. You would have to open a seperate accumulation super fund.  That would then beg the question about whether you just invest in something else instead like index share funds or property.

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10 hours ago, Ilovethebeach said:

Effie you can’t salary sacrifice on a defined benefit. You would have to open a seperate accumulation super fund.  That would then beg the question about whether you just invest in something else instead like index share funds or property.

that was my understanding too re db schemes, although i haven't looked too deeply into it. I still have a mortgage so assume that paying that off is probably the most important thing to do now. I just wanted to see if there was any way of counteracting the part time impact on super at this age rather than waiting until i am older. i suppose the only way is saving my money and investing it once we have paid of the mortgage.

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I have a defined benefits super plus a separate one I can contribute to as I go. Its by complete accident I opened and contributed to the other one in my 20s by a different employer. When they merged onto my tax account about two years ago, I was lucky, it was active, hadn't had lots of fees removed and I could still add to it. So I have started adding in a few thousand each year. Yes it's savings and you should get advice of managing it for your tax situation, but my small amount of payments go in pre-tax and therefore decreases my taxable income. I realise how lucky I am to have this happen but definitely worth checking out a separate account to squirrel away some money for retirement if your lucky enough to do it. 

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nom_de_plume

It's probably best to speak to your superannuation fund. With defined benefits schemes, you have to contribute a certain amount (in addition to your employer's contribution) to reach your maximum multiplier. They will be able to calculate and tell you what your multiplier is based on your current contributions, and how much extra you would need to make in catch up contributions to reach your maximum. You can salary sacrifice your contributions if you wish but it's best to obtain independent advice from your tax agent (or similar) prior to doing this as it's a reportable contribution, and therefore impacts your adjusted taxable income which is used to calculate HECS repayments, Medicare Levy Surcharge, entitlement to FTB and CCS, child support payments and various tax offsets. You can also open an accumulation fund with your current fund or another fund and make separate pre- or post- tax contributions to that if you wish.

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nom_de_plume

Also - if you're currently making the maximum pre-tax (concessional) contributions, you can still make additional post-tax (non-concessional) contributions. Different caps apply and if you meet certain conditions (balance under a certain amount, under a certain age) you can 'bring forward' several years of contributions, although this is usually a strategy people use when they are close to retirement.

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You're doing the right thing  by contributing your max even if part time.  You can probably Salary Sacrifice into another fund but may have to pay fees and it will be added back in to form your ATI.

In  this time of low interest rates i'm all for paying off your mortgage as fast as you can.  

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It is important to get sound financial advice from someone who is experienced in your super scheme to get advice based on your circumstances. As other posters have said there are many options open to you. It is worth the cost of at least one appointment.

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Not Escapin Xmas
6 hours ago, nom_de_plume said:

It's probably best to speak to your superannuation fund. With defined benefits schemes, you have to contribute a certain amount (in addition to your employer's contribution) to reach your maximum multiplier. They will be able to calculate and tell you what your multiplier is based on your current contributions, and how much extra you would need to make in catch up contributions to reach your maximum. You can salary sacrifice your contributions if you wish but it's best to obtain independent advice from your tax agent (or similar) prior to doing this as it's a reportable contribution, and therefore impacts your adjusted taxable income which is used to calculate HECS repayments, Medicare Levy Surcharge, entitlement to FTB and CCS, child support payments and various tax offsets. You can also open an accumulation fund with your current fund or another fund and make separate pre- or post- tax contributions to that if you wish.

As the first line of this post says, call your super fund. The rest is conjecture.

Good on you for getting onto it though. Anything you do now at 40 will be much more valuable than if you wait until 50. As Einstein is supposed to have said ‘compound interest is the 8th wonder of the world’.

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Ilovethebeach
8 hours ago, nom_de_plume said:

It's probably best to speak to your superannuation fund. With defined benefits schemes, you have to contribute a certain amount (in addition to your employer's contribution) to reach your maximum multiplier. They will be able to calculate and tell you what your multiplier is based on your current contributions, and how much extra you would need to make in catch up contributions to reach your maximum. You can salary sacrifice your contributions if you wish but it's best to obtain independent advice from your tax agent (or similar) prior to doing this as it's a reportable contribution, and therefore impacts your adjusted taxable income which is used to calculate HECS repayments, Medicare Levy Surcharge, entitlement to FTB and CCS, child support payments and various tax offsets. You can also open an accumulation fund with your current fund or another fund and make separate pre- or post- tax contributions to that if you wish.

She can't contribute more than 10% though that's the max for a db.

It's easy to calculate your multiplier your fund should have a calculator on their website. The pss one for example has a calculator when you project an exit date.

Good luck.

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Ilovethebeach
9 hours ago, Elfie34 said:

that was my understanding too re db schemes, although i haven't looked too deeply into it. I still have a mortgage so assume that paying that off is probably the most important thing to do now. I just wanted to see if there was any way of counteracting the part time impact on super at this age rather than waiting until i am older. i suppose the only way is saving my money and investing it once we have paid of the mortgage.

Effie I have looked into :)

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nom_de_plume
1 hour ago, Ilovethebeach said:

She can't contribute more than 10% though that's the max for a db.

It's easy to calculate your multiplier your fund should have a calculator on their website. The pss one for example has a calculator when you project an exit date.

Good luck.

It depends on your age, previous contributions, your fund and whether the contributions are pre or post tax. DP is with Emergency Services Super and you can definitely contribute more than 10% pre-tax (providing you don't exceed the concessional cap) if you're on a catch up rate (he is). 

My main point was really just for OP to talk to their fund as they will be able to give them tailored advice.

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