This one is for our Aussie readers and a great strategy for some couples to help manage their retirement savings. If you’re an international reader, does your government offer something similar? I’d love to hear how it’s done in your country.
A spouse contribution split can help reduce a member’s total superannuation (retirement savings) balance below a trigger point or, when used as an ongoing annual strategy, can help achieve a measure of account equalisation between spouses. It can also be helpful to reduce a super balance where one spouse is somewhat older than another.
Firstly, to be eligible, the receiving spouse must be under 65 and, if over preservation age, not retired. (Where the receiving spouse turns 65 during the year of the split, action will need to take place before their birthday and is paid as a rollover super benefit.)
Too much jargon right? So what does it look like?
Punch and Judy are married. Punch is now the sole breadwinner as Judy wants to stay home for a couple of years while The Baby is still cute. She’s not earning and her Super retirement savings will be impacted.
Punch is on a good wicket and gets a hefty amount paid into his Super fund by his employer. Because Judy is amazing, and doing a brilliant job with their kid, Punch wants to make sure she’s not disadvantaged and chooses to split his super with her.
Punch has a sufficient account balance and as his boss has put in a $25,000 contribution, he can pass over up to 85% or $21,250 to Judy’s fund. Happy wife, happy life!
Punch is a good partner, be like Punch… (ok, he’s usually a tosser, but this time he’s nice!)
Contributions splitting does not reduce the contributions originally made for the member for reporting and contribution caps purposes.
If you think Super Splitting could be beneficial for your family, it’s worth chatting with an adviser to find out more to find out the tips and traps and whether it’s right for you.