Topping up your partners super

Topping up your partners super

Remember Claire our Financial best Friend - FBF? Ofcourse you do. Her actual Best Friend Forever -BFF is Isobel. Unlike Claire, Isobel is married, she has been for 12 years. Isobel is married to Adam. Their super story is about spouse (a horrible way of saying partner) contributions. Claire talked to Isobel and Adam about what they were doing to secure their future together.

Claire: Not a conversation we have everyday, but tell me about spouse contributions when it comes to your partner's superannuation. I know a lot of my Child Care Super friends will be interested in what it all means.

Adam: Let me kick off, if like Isobel, your partner is earning a lower income, taking time off work for caring responsibilities, or working part-time, then it’s likely they’re not earning much super. This means that their super can fall behind, it’s actually a big problem in Australia. This is exactly what happened to us. Making a contribution into Isobel’s (my spouse) super account may help to increase her retirement savings and may provide us with an offset to reduce tax payable.

Isobel: Luckily, Adam can generally help ensure my superannuation continues to grow and gets topped up by:

  • making a Spouse Contribution to my Child Care Super account - this is when your spouse or partner makes a personal after-tax contribution directly into your super.
  • arrange for Contribution Splitting - this is when before tax contributions, such as payments made by an employer, are directly transferred from your spouse or partner’s super account into your super account.

Adam: Topping up your spouse’s super account is a great way to help build a secure financial future together to share during retirement years. As long as you both meet the eligibility criteria, like us, you may be able to grow both your super accounts and reduce your tax bill.

Isobel: Spouse super contributions can now be made for spouses earning up to $40,000 per year. If your partner has earnings below $37,000 you can claim the maximum tax offset of $540 when you contribute $3,000 to their super.

Claire: So, a spouse contribution involves making a contribution to your partner’s super fund to help build their retirement savings? And if I get this right, the benefits may be:

  • that you receive a tax offset for contributions for a low income or non-working spouse,
  • boost the super balance of a spouse who has little or no super and grow your retirement savings as a couple, and
  • accumulate wealth since earnings within super may be taxed at a lower rate than investments outside super?

Isobel: Exactly, with Child Care Super, you can make contributions for your spouse (into your spouse’s superannuation account) or receive contributions into your superannuation account from your spouse.

Claire: How does Adam make the contributions?

Adam: Child Care Super allows us to make these contributions in a number of different ways.

  • By BPAY® – contact Child Care Super or log into Member Online for details
  • Via your employer – ask if they can send your contributions to Child Care Super along with the SG contributions, or
  • By cheque – complete a Member Personal Contribution form and send it to Child Care Super

Claire’s super savvy tip

To learn more about splitting super contributions and ways to boost your super, MoneySmart is a great place to start.