Use it or lose it: put $180,000 into super while you still can


If you want to ramp up your superannuation, take advantage of the $180,000 contribution cap limit before it is slashed to a lower limit of $100,000.

You have seven months before the existing super contribution cap drops to a much lower limit on July 1, 2017.

"We see it as a cracking opportunity for people to boost their superannuation before a new, more restrictive, superannuation regime comes into force," says Michael Hutton, head of wealth management at HLB Mann Judd Sydney.


"Government changes in recent years have made the old approach, of topping up super in the last 10 years before retirement, virtually impossible."

The government scrapped the proposed retrospective lifetime non-concessional contributions cap of $500,000 and agreed to maintain the current cap of $180,000 until June 30, 2017.

Then it becomes an annual non-concessional contributions cap of $100,000, or $300,000 brought forward over three years. This is only available to people with a superannuation balance of less than $1.6 million.

Hutton says the opportunity to maximise non-concessional contributions under the current system is similar to when the government allowed everyone a one-off, non-concessional contribution limit of $1 million in 2007.

He admits that people are reluctant to put extra money into superannuation because of the government's tinkering with the rules.

But superannuation is still the best place to hold money because there is no other investment opportunity with generous tax benefits, he says.

Superannuation has a low 15% tax on contributions while there is no tax paid on superannuation pensions for people aged over 60. He says superannuation has a strong investment structure and regulations while also providing asset protection.

But the limit on superannuation contributions makes it increasingly difficult to put large sums of money into superannuation.

"So people really need to a find way to put smaller sums in, more frequently, early in their working life," says Hutton. "It's more important than ever for people to start thinking about their superannuation early."

"While we used to talk to clients about focusing on superannuation when they were in their fifties, we are now having these conversations when clients are in their thirties," says Hutton.

Non-concessional super contribution cap

super contribution cap

Source: HLB Mann Judd



Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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