Boost super

Increase super and reduce tax

This transition to retirement strategy aims to use the tax effectiveness of super to increase your total super savings without having to reduce your take-home income along the way.

It involves opening a superannuation product, known as an account-based income stream. You roll a portion of your super into your income stream account, which pays you regular income payments from your account balance. To boost your super, you make voluntary before tax contributions into PSSap via a salary sacrifice arrangement with your employer.

Benefits can include:

  • potentially higher final super benefit
  • super (tax free from age 60) as a regular income stream while still working and making voluntary contributions (eg salary sacrifice) to your PSSap account
  • tax-free investment returns within your income stream account.

It's possible to take up this strategy in the Australian Government super environment using the income stream product available to PSSap members, called Commonwealth Superannuation Corporation retirement income (CSCri). CSCri is offered through PSSap.

More information

How the strategy works

How to take up this strategy in the Australian Government super environment:

Eligibility

You must be a PSSap contributor who:

  • has reached preservation age (age 60 if born on or after 1 July 1964)
  • can transfer a minimum of $20,000 from PSSap into an income stream product called Commonwealth Superannuation Corporation retirement income (CSCri).

See withdrawing super to find out your preservation age.

Strategy set-up

Open a CSCri account with a minimum starting balance of $20,000:

  • get regular income stream payments from CSCri (monthly, quarterly, half yearly or annually) between minimum and maximum annual payment amounts
  • salary sacrifice a portion of your before-tax income into PSSap each pay period (while staying within your annual contribution limits to avoid extra tax).

Take home income

Because of the tax-effectiveness of salary sacrificing into super while getting income payments from super, you can increase your total super savings and enjoy a similar take-home income. This strategy can be most effective from age 60 because your income payments will be tax free.

Final super benefit

Your final super benefit will depend on factors such as your salary, the level of take-home income you need, the amount of super you have, investment returns, if you are age 60 or not (when income payments from super become tax-free) and the length of time until you retire.

To maximise your benefit, consider:

  • how long until you wish to retire
  • how much you can add each pay period in salary sacrifice (within your annual limits)
  • how much income you need to live on before retirement.

To help work out much you could end-up with, use the following calculators:

Voluntary super contributions

Make extra savings to your PSSap account in the following ways:

  • salary sacrifice
  • personal (after tax) contributions
  • spouse contributions

See extra contributions to learn more about these options.

Permanent retirement

What happens to this strategy when you stop work and permanently retire?

Because you no longer work for a PSSap participating employer, you can no longer save into PSSap. Instead, you can consolidate your super into PSSap before you permanently retire. Then you can open a single retirement income stream with your consolidated super to enjoy:

  • regular payments to meet your income needs
  • no set maximum annual income amounts
  • tax-free payments from age 60
  • ad-hoc withdrawals when needed
  • investment choice
  • tax-free returns
  • online account management.

See open income stream to join the income stream product for PSSap members called Commonwealth Superannuation Corporation retirement income (CSCri). This product can be used as either a transition or a regular retirement income stream.

Financial advice

We encourage you to first speak with a financial planner to ensure this transition strategy is appropriate for your needs, circumstances and retirement planning goals.

See financial advice to learn about the personal financial advice service offered to PSSap members by CSC's authorised* financial planners.

* Our authorised financial planners are authorised to provide advice by Guideway Financial Services (ABN 46 156 498 538, AFSL 420367.). Guideway is a licensed financial services business providing CSC financial planners with support to provide members with specialist advice, education and strategies.

Contribution limits

There are annual super contributions limits in place which restrict the amount of super people can contribute each financial year at a low tax rate. If you exceed the contribution limits, any excess contributions may be taxed at the highest marginal tax rate plus the Medicare levy.

Your employer contributions are included under these limits.

See the Tax and your super booklet to for more information on annual contribution limits.

Start today

 

See open income stream to join the CSCri income stream product.