Adding to your spouse's super can help you as well, writes Neal Vaughan.
ANZ Wealth chief executive officer Joyce Philips recently called for joint superannuation accounts for couples to help boost women's retirement savings.
Her comments highlight a common issue for married or defacto couples: the higher paid partner building a substantial super balance and often paying substantial tax while a lower paid or stay-at-home spouse accumulates much less super for the future.
Joint accounts are one method, but there are other ways couples can balance out their super holdings. Spouse super contributions are the most obvious way.
Henderson Maxwell senior advisor Tony Davison says "a spouse contribution allows one partner to make an after-tax contribution into their partner’s super fund and there are benefits if their spouse’s income falls below $13,800”.
“There’s currently a potential tax saving of up to $540 by doing this but the important point is to help the lower-paid partner build up more super."
Rules on spouse contributions can be found on the Australian Taxation Office’s website. Although partners can contribute more than $3000 as a spouse contribution, the tax offset only applies on the first $3000 made.
You may claim a tax offset of up to 18 per cent of the contribution paid provided your spouse’s assessable income falls below the current threshold of $13,800. The tax offset reduces once income exceeds $10,800. And there are certain caveats on how this income is derived.
The second little-known area is “contributions splitting” or co-contributions. Davidson says many couples are unaware they can split one partner's employer super contributions with their spouse.
The ATO super splitting fact sheet currently shows you can transfer up to 85 per cent of your previous year's super guarantee contributions to your partner’s super account. (Note not all funds allow super splitting)
Davidson emphasises that "contribution splitting can really help boost the super of a partner on a very low income – often a woman taking time off their career while raising a family".
Australian Bureau of Statistics figures show that on average, women currently retire with 47 per cent less super than men. Joyce Philips believes joint super accounts could help improve women’s super outcomes.
Around two-thirds of Australians were married when they retired and have pooled their finances across other areas of their lives, so joint superannuation accounts make sense, Phillips was reported as saying in The Sydney Morning Herald.
She believes such accounts would put a sharper focus on women’s superannuation, and allow a cleaner split after a break-up. Figures from Rice Warner estimate joint superannuation accounts would reduce the number of super accounts by 10 per cent and couples would benefit from only paying one set of fees.
If you want to take advantage of spouse contributions or contribution splitting talk to your super fund or employer and seek professional tax advice. The Australian Securities and Investment Commission MoneySmart site has helpful advice and links to ATO spouse super rules.