How Australia Saves 2019, a collaboration between Vanguard and three major funds examine how over 2.3 million members of these funds managed their super, including contributions, over the three years to June 2018.
In 2017-18, just 12 per cent of members receiving compulsory superannuation guarantee (SG) contributions made additional voluntary contributions – an almost identical percentage over the three years covered by the research.
This underlines the importance of Australia's SG contributions to retirement savings as well as the need for members to consider making voluntary contributions when possible. (The current SG rate, payable by employers, is 9.5 per cent of salaries.)
How Australia Saves reports that 8 per cent of working members receiving compulsory contributions into these funds during 2017-18 made salary-sacrificed contributions. Just 3 per cent of members also made non-concessional (after-tax) contributions while 1 per cent made both non-concessional and salary-sacrificed contributions.
Members making voluntary contributions in addition to compulsory contributions had a much higher median age, income and length of fund membership than members relying solely on compulsory contributions.
A message from this research is that super fund members should understand what steps they can take to boost their super savings – depending upon their personal circumstances.
For most employees, perhaps the most straightforward way to save more in super is to begin making salary-sacrificed contributions. And members already making these contributions can consider whether to "sacrifice" more into super each pay day if affordable.
As with all concessional (before-tax) contributions, salary-sacrificed contributions are not taxed at a member's personal tax rate but are taxed at 15 per cent upon entering a super fund. Typically, this is a valuable tax savings.
Making salary-sacrificed super contributions is a simple and disciplined way to save. First confirm the impact of salary sacrificing with your employer (in some instances, it may reduce the amount of SG your employer is obligated to pay on your behalf) and if it suits, tell your employer how much you want to regularly contribute. And think about increasing the amount of the regular contribution at least once a year or whenever you get a pay rise.
Keep in mind that the annual concessional contributions cap for all eligible super fund members is currently $25,000. (This cap covers compulsory SG contributions, salary-sacrificed contributions, and personally-deductible contributions by eligible self-employed individuals and investors.)
After-tax contributions (including inheritances)
Astute super members look for opportunities to contribute more to super as non-concessional (after-tax) contributions – may be after they receive an inheritance or sell a non-super investment such as a rental property.
Being ready to make extra personal contributions whenever extra money becomes available is a smart approach to quickly increasing retirement savings.
Again, take care not to overshoot the contribution caps. (The standard annual non-concessional contributions cap is $100,000 for 2018-19. Fund members under 65 have the option of bringing forward non-concessional contributions to $300,000 over three years, depending upon their total super balance. The latest Federal Budget proposes to increase the age limit for bring-forward contributions from 2020-21.)
Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
09 April 2019
For more than 20 years, Sam has been a financial planner helping individuals and families achieve their financial planning goals, by providing advice on Investment Planning; Insurance Planning; Tax Planning; Retirement Planning; and Estate Planning. Working with a network of highly skilled professionals in Sydney he is dedicated to providing high-quality advice and integrated wealth management solutions that simplify and enhance the quality of his clients' lives.
Sam established his own firm in 1997 and has overseen its steady development and growth. Attention to detail, good listening skills and great empathy are symbols of his appreciation by his clients. He has built long-term relationships with his growing client base and aims to provide excellent customer service.
Sam began his financial planning career in 1993 after completing a Bachelor of Science degree in 1991. Since this time he has accumulated many professional qualifications such as:
Sam has volunteered with the Cancer Council of NSW and can be seen almost every year volunteering or participating in the 7 bridges walk.
Away from the business, he enjoys spending weekends with his son. He is also a football (soccer) tragic and is a massive Chelsea FC fan.
Having worked for national financial planning companies in the past, George has extensive experience in the provision of advice in risk insurance, investments and retirement planning and is focused on forming long-term relationships with his clients.
George has been awarded a Masters of Commerce (Financial Planning) and a Bachelor of Commerce through University of Western Sydney as well as having the Diploma of Financial Services (Financial Planning).
Jane Lim is a friendly character with a bubbly personality. She has the unique ability of making complex information sound simple and easy to digest.
Jane entered the financial services industry in 2006, and worked with big blue-chip financial companies such as Count Financial Limited and AMP Financial Planning Pty Ltd.
She holds a Master's degree in Applied Finance through Macquarie University, and she is a member of the Million Dollar Round Table.
Being a self-confessed "tennis nut", Jane spends many weeknights in the tennis court, and is a frequent member of Sydney's Eastern Suburbs Tennis Competition.
Being a highly motivated professional, Jane is always eager to help her clients on a wide range of financial planning needs.
Paul has been a financial planner for over 15 years helping individuals and families successfully achieve their financial planning goals. He is very focused on building successful long-term harmonious relationships with his clients.
He provides a holistic approach on various aspects of financial advice encompassing areas such as Investment Planning; Insurance Planning; Tax Planning; Retirement Planning and has extensive experience and knowledge in these fields.
Paul's professional qualifications are:
Away from his professional life, he enjoys spending his time with his family doing various activities such as coaching his son and taking him to games. He is a very avid sports fan and a cricket enthusiast.
Client Services Manager
Christian joined Capitalwise as Client Services Manager, with backgrounds in both customer service and administration.
Christian is passionate in providing excellent customer service by being attentive to client’s need as well as being able to circumnavigate challenges.
He holds a Master's degree in Commerce specialising in Marketing through the University of New South Wales.
Volunteering is one of his delights in life, where he had spent time being involved with the Centre for Volunteering, St Vincent de Paul's Society, and Sculpture by the Sea in a variety of positions.
Jenny is a University of New South Wales graduate who joined the team as an Administration Assistant. She is keen to put her customer service and organisational skills to use, making sure day to day operations run as smoothly as possible.
Outside of work, Jenny focuses her efforts on karate and ice hockey. She can often be found coaching and practicing karate at her alma mater. The rest of her time is spent at one of Sydney’s many ice rinks playing, practicing, or officiating ice hockey.
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