Why time could be running out to top up your super


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Do you need to take a closer look at your superannuation as soon as possible? The answer could be yes if you want to put a large amount of money into your fund.

If Labor wins Saturday's election, you won't be allowed to contribute as much as you can now under the Coalition government.

Many Australians need to boost their retirement savings and this is hard to do with the contribution cap of $25,000 a year.

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If you are close to retirement, want to boost your super and have money sitting outside your fund, now is a good time to think about contributing. Why?

Labor plans to lower the non-concessional contribution limit. This means it will be harder to get your money into super as a one-off contribution.

Under current arrangements, super fund members can make non-concessional contributions of up to $100,000 a year, as long as their super balance is under $1.6 million.

Labor will lower the annual non-concessional contributions cap to $75,000.

Non-concessional contributions are important for many people - particularly women - who need to boost their balance as they near retirement. Large one-off contributions often arise from selling an investment or a divorce settlement or receiving a windfall in the form of an inheritance or redundancy payout. They can help you take advantage of the generous tax benefits, such as retirees over 60 paying no tax on their income from super.

Another change is for Australians under 65 who can use the bring-forward rule and make a non-concessional contribution of $300,000 covering three years. If the account balance is above $1.4 million, the amount that can be brought forward is reduced.

Under Labor's policy, the non-concessional contribution cap would fall to $75,000 and the bring-forward rule would change to a one-off contribution capped at $225,000 for an individual or $450,000 for a couple.

Another big change under Labor is catch-up provisions for concessional contributions. Under the current arrangement, fund members can carry forward contribution shortfalls for up to five years. The shortfall is the difference between concessional contributions made to a super account and the $25,000 cap.

To be able to use the catch-up arrangements, the super balance must be less than $500,000. Labor has said it would abolish catch-up contributions.

Labor also plans to lower the high-income contribution threshold from $250,000 to $200,000. Under current arrangements, the standard rate of contribution tax is 15%. High-income earners pay an additional 15% on concessional contributions above the threshold.

On the flip side, Australians earning less than $450 a month, such as part-time or casual workers, will receive super contributions for the first time under a Labor government. It will phase out the $450 minimum monthly income threshold for eligibility for the super guarantee.

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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.