Super tips for savvy couples

Most super saving strategies apply equally to everyone, but strategies such as super splitting or sharing contributions are available only to couples.

By Annette Sampson   - 3 min read

A little about Annette

Annette Sampson has spent many years writing about how we can all make the most of our personal finances. She specialises in making complex subjects like super easier to understand.

It’s easy to think of super as a ‘me’ thing. My name on the statements, my money coming out of my pay, my retirement.

But if you’re in a relationship, it makes good sense to think of super as a ‘we’ thing too.

There are many strategies you can use to maximise your own future retirement income, but there are a few extra options that are available to couples only. The advantage for couples is that extra contributions to super can be targeted to save on tax and ensure both partners build up a good nest egg to fund their retirement income.

Balancing act

Unfortunately, women still draw the short straw when it comes to super. In July 2021 (the most recent figures available ), the average male had $189,890 in super according to the Association of Superannuation Funds of Australia. The average female had $150,920.

For 60 to 64-year-olds, men had an average $402,838 versus $318,203 for women. These numbers are skewed by a small proportion of people who have large super accounts. But even the median account balance (the one in the middle of the range) was lower for women—$158,806 versus $211,996 for men.

Women still, on average, earn less than men and they’re more likely to take time out of the workforce to have children and care for family members.

From July next year, super contributions will be paid on government-funded parental leave, but there is currently no requirement for employers to pay it.

While it doesn’t affect most people, it’s also worth noting there is a $1.9 million cap on the amount that you can transfer from your super into a tax-free retirement account. But a couple can transfer a total of $3.8 million between them if they both have high amounts in super.

So, what can couples do?

Different types of contributions Super contributions fall into two baskets:  Before-tax contributions (or concessional contributions) are contributions made from pre-tax money, for example, employer contributions, salary sacrifice or personal deductible contributions (i.e. where you have claimed a tax deduction). There is currently a $30,000 a year cap on these contributions, though if you have less than $500,000 in super you may have a higher cap to ‘catch-up’ unused amounts from the past five years. After-tax contributions (or non-concessional contributions) are made from your after-tax money and are limited to $120,000 this year. People under 75 can contribute up to three times this amount by ‘bringing forward’ their cap for the next two years.

Sharing the love (and money)

For couples, after-tax contributions are most useful for boosting a partner’s super account when they have the means to do so as they can be made to either partner’s account. Windfalls such as an inheritance, or proceeds from the sale of an investment, can be a handy way to top up your partner’s super.

If you want to even up the balances in your super accounts or offset super that your partner missed out on by not working, there are ways to share.

Super splitting

One way to share some of your before-tax super contributions is to split them each year with your partner. You can simply ask your super fund after the end of the financial year to transfer the relevant contributions to your spouse’s account.

For example, if your employer paid $15,000 into your super fund last year, and you made further concessional contributions of $5,000, you could apply to transfer up to $17,000 to your partner’s account. The difference is the 15 per cent tax that applies on all before-tax contributions.

There are some restrictions on the type of super contributions that can be split (for example, you can’t split after-tax contributions).

Super tax offset

If your partner isn’t working, or is earning less than $40,000 a year, you may be able to claim an 18 per cent tax offset for contributing up to $3,000 to your partner’s account each year. The maximum offset is $540 a year if your partner’s income is less than $37,000.

Co-contribution

The super co-contribution can also be used to build either your own, or someone else’s super. The government will pitch in 50 cents for every after-tax dollar contributed to your account if you earn less than $45,400 and earn at least 10 per cent of your income from employment or carrying on a business. The maximum co-contribution is $500 and requires $1,000 in contributions – or around $20 a week. A smaller co-contribution is available for people earning up to $60,400.

Downsizer contributions Thinking of downsizing your home before you retire? The government will allow you to contribute up to $300,000 of the sale proceeds from downsizing as an after-tax super contribution once you reach 55. Each partner can claim the benefit so that’s up to $600,000 that can be transferred to super as you near retirement.

Whether you’re single or coupled up, the secret to having a healthy income in retirement is the same: every little bit matters. But if you are in a relationship, thinking of super as a ‘we’ thing rather than a ‘me’ thing, can give you an advantage.

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