Making extra contributions to your super

Did you know that Military Super (aka Military Superannuation and Benefits Scheme or MSBS) allows you to make extra contributions to your account?

Most members are aware that contributing MilitarySuper members must contribute a minimum of 5% of their super salary as post-tax member contributions. They may increase those contributions up to a maximum of 10% of their super salary.

A common myth about MilitarySuper is that you cannot make contributions above 10% of your super salary. However, there is a range of other ways to contribute to the ancillary benefit component of your MilitarySuper benefit. These are called ancillary contributions.

There are 3 ways you can make ancillary contributions to MilitarySuper:

1. Salary Sacrifice (Pre-tax)
2. Additional Personal Contributions (Post-tax)
3. Spouse contributions (Post-tax)

An obvious thing about super is that it is generally for the purpose of providing benefits in your retirement. However, making ancillary contributions may have more immediate benefits in the way of tax concessions.

Salary sacrificing pre-tax contributions may reduce your taxable income in a financial year. These contributions will generally be taxed at 15% on entry into the fund.

Additional personal contributions and spouse contributions generally will not attract extra tax upon entry into MilitarySuper. The earnings on those contributions are only taxed at 15% within the fund, as opposed to marginal tax rates applied to interest on things like bank accounts.

Spouse contributions are contributions that you, as a member, can make to a MilitarySuper ancillary account on behalf of your spouse. Depending on your spouse’s income for the year, you may be able to claim a tax deduction when completing your tax return.

Super is generally for your retirement and not every ancillary contribution option is suitable for everyone. The key thing is that there are a number of options for making additional superannuation contributions when thinking about your retirement.

It is important to note that all contributions to super are subject to the ATO contribution limits which, if exceeded, may result in adverse tax consequences. It is also important to know that any ancillary contributions will, like your member contributions, be impacted by investment performance (positive and negative) and any fees and costs relating to their investment.

Before making any decisions you should read the MilitarySuper Product Disclosure Statement available at www.csc.gov.au, and you may wish to consult one of CSC’s authorised financial planners (note 1).

This article has been prepared by Commonwealth Superannuation Corporation (CSC) (ABN 48 882 818 243, AFSL 238069, RSEL L0001397) as trustee of the Military Superannuation and Benefits Scheme (MilitarySuper) (ABN 50 925 523 120, RSE R1000306).

Any financial product advice in this article is general advice only and has been prepared without taking account of your personal objectives, financial situation or needs. Before acting on any such general advice, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Note 1: CSC’s authorised financial planners are authorised to provide advice by Guideway Financial Services (ABN 46 156 498 538, AFSL 420369). Guideway is a licensed financial services business providing CSC financial planners with support to provide members with specialist advice, education and strategies.

Note 2: From the Editor……If you are a longstanding ADF member who has reached (or are about to reach) your MBL (Maximum Benefit Limit) you should understand the consequences and financial planning options. Consider seeking personal financial advice from one of CSC’s authorised financial planners or from a licensed financial planner of your choice.