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Money Habits

Why you should consider making extra super contributions

13 September 2021

When was the last time you thought about super? For many of us, retirement can sometimes seem to be ‘out of sight and out of mind’.

But planning ahead could make a real difference over the long term.

The benefits of extra super contributions

Larger super nest egg = a more comfortable retirement

You may think extra contributions aren’t essential. After all, your employer already pays 9.5% of your earnings1 into super. However, a larger nest egg may help you meet more costly retirement goals, like being able to enjoy overseas travel.

Even adding a relatively small additional contribution every week over the course of your working life may have a big impact on your super balance at retirement, as shown in the chart below.

 

*Result is indicative only and based on a number of assumptions that apply to our generic Superannuation Contributions Calculator. Refer to the calculator for more information. Assumptions include (but are not limited to): employer agrees to provide a salary sacrifice arrangement, salary sacrifice: contributions are paid from age 30 to age 67 ; retirement age is 67, employer pays SG contributions at rate of 9.5% of salary over same period, admin fees and super investment fees are deducted from the investment earnings rate; yearly administrative fee is 0.75% p.a of the balance at the end of the year and $1.5/week; investment fee 0.2% p.a of balance; 3.2% is the default inflation rate in the calculator; investment return rate used is 6.3% p.a, based on an average balanced investment portfolio return; results in today’s dollars.

Source: Suncorp Wealth. Based on results obtained from using our generic Superannuation Contributions Calculator (suncorp.com.au) provided by Green Spark.


Before deciding to make personal contributions, we recommend you seek advice from a financial adviser. If you contribute too much you may exceed the contributions cap for concessional after-tax contributions (in the 2020-21 tax year, this is generally $100,000) resulting in having to pay higher tax on the excess. So, consider how much you can contribute for you before you reach the cap.

Potential tax savings

It’s important to know that your super contributions are still taxed at 15% and there’s a maximum amount of concessional pre-tax super contributions you can make before the excess is taxed at a higher rate (in the 2020-21 tax year, this is $25,000, although the exact amount may depend on your age).

For more information, check out Suncorp Super’s page about making extra super contributions and talk to a financial adviser before deciding whether to ask your employer if they can provide you a salary sacrifice arrangement.

An easier, more automatic way to save

Do you find it more difficult to eat healthy when there are yummy treats in the fridge? If you’re like most of us, you do. This concept can be applied to most things in life, including saving for retirement.

Setting up salary sacrificing through your employer can help curb your spending temptation. It makes saving more for retirement something you do every pay period, rather than something you’ll get to later.

Of course, your present needs should be prioritised and salary sacrificing isn’t right for everyone. Check out Suncorp’s Superannuation Contributions Calculator and speak to a financial adviser to work out what could be right for you.

Need a super product? Check out Suncorp’s Super product2 options. Our transparent fees, extensive investment choice, comprehensive insurance options and easy-to-use online tools can help you build your financial future. Consider opening a Suncorp Super product account today and start feathering your nest egg!                        

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Things you should know:

1. These are superannuation guarantee (SG) contributions, which are paid at a rate of 9.5% of an employee’s ordinary times earnings (OTE). For information about contributions and OTE, please refer to the ATO website: https://www.ato.gov.au/Individuals/Super/.

2. If you take out a Suncorp super product, you will become a member of the SPSL Master Trust.

Suncorp super products and this article are issued by SPSL Limited ABN 61 063 427 958 AFSL 237905 RSE licence number L0002059 (the Trustee), trustee for the SPSL Master Trust ABN 98 350 952 022, RSE Fund Registration No. R1056655 (the Fund). The Trustee is wholly owned by LGIAsuper Trustee as trustee for LGIAsuper (LGIAsuper) and is not part of the Suncorp Group. The Trustee uses the ‘Suncorp’ brand under licence. Suncorp Super products are not bank deposits or bank liabilities and are subject to investment risk, including loss of the interest and principal invested. The obligations of the Trustee aren't guaranteed by any company within the Suncorp Group or the LGIAsuper Group, nor do either Group guarantee the performance of Suncorp Super products. This is general advice only and does not take into account your personal objectives, financial situation or needs. Before acting on any advice in this document, you should consider the appropriateness of the advice to your personal objectives, financial situation and needs. Before making a decision whether to acquire a Suncorp Super product account, including a decision to take out insurance cover, you should read and consider the relevant Suncorp Super disclosure documents, including the Product Disclosure Statement and Product Guide, available at suncorp.com.au/super, and speak to your financial adviser. Insurance cover offered through Suncorp super products is provided by insurers who are not part of the Suncorp Group or the LGIAsuper Group..