As retirement approaches, many couples find significant imbalances in their superannuation accounts. Addressing these disparities proactively can enhance retirement strategies and improve financial outcomes.
Your Total Superannuation Balance (TSB) as of
30 June each year determines your eligibility for several superannuation strategies in the following financial year. These include:
- Non-concessional contributions: Available when your TSB is below $1.9 million.
- Carry-forward concessional contributions: Permitted if your TSB is below $500,000.
- Tax-deductible personal contributions (ages 67–74): Allowed when your TSB is below $300,000.
The Age Pension and Superannuation Balances
For couples, the Age Pension asset test only considers superannuation for individuals who have reached pension age. If one spouse is significantly younger, redirecting more super to the younger spouse’s account can increase potential Age Pension entitlements upon retirement.
What is Spouse Contribution Splitting?
Spouse contribution splitting enables you to transfer up to 85% of your annual concessional contributions to your spouse’s superannuation account. Key details include:
- Eligible contributions: Superannuation guarantee, salary sacrifice, and tax-deductible personal contributions.
- Annual limit: Generally capped at $25,500 (85% of the $30,000 concessional contributions cap).
- Timing: Contributions can only be split for the previous financial year.
- Eligibility of receiving spouse: Must be under age 65, or aged 60–64 and not retired.
- No impact on contribution caps: The split is treated as a rollover and does not count towards the receiving spouse’s contribution caps.
Important Considerations:
- Not all super funds offer contribution splitting, so confirm with your fund.
- Applications for contribution splitting must be made after the financial year in which the contributions were made. However, if your entire super balance is rolled over or withdrawn during the financial year, you can apply within the same year.
Why Consider Spouse Contribution Splitting?
This strategy can help equalise superannuation balances between spouses, maximising retirement benefits and improving long-term financial outcomes. It may also enable better access to strategies dependent on TSB thresholds.
Next Steps:
Evaluate your personal circumstances and retirement goals. Consult with one of our team or a professional adviser to determine whether spouse contribution splitting aligns with your financial strategy and how to navigate the application process effectively.