Contributing with your spouse

ESSSuper - 26 Jul 2021

We're proud to support our members, and that means supporting your spouse too, because we understand that your retirement plan belongs to both of you.

Your spouse's super balance may be lower than yours for a number of reasons. Luckily, you can help their super to grow, by:

• Making a spouse contribution to their super account
• Arranging for contribution splitting (also known as super splitting).

But what's the difference between contribution splitting and spouse contributions? And how can they benefit you? In this article we'll explore the value of topping up your spouse's super, and how it can set you both up for a healthy financial future.

What is contribution splitting?

If your spouse is under preservation age, or aged between preservation age and 65 and not yet retired, you can split up to 85% of a financial year's worth of your own concessional (before tax) super contributions to your spouse's super account.

The contributions that you can split typically need to have been made in the previous year, and may include your employer's Superannuation Guarantee contributions, salary sacrifice contributions, and personal after-tax contributions for which you've claimed a tax deduction.

What are the benefits of contribution splitting?

A carefully considered contribution splitting strategy not only allows you to support your spouse, it can also help build up your combined wealth and set you both up for a comfortable retirement. Here are some of the benefits of contribution splitting.

Superannuation benefits

Splitting contributions with an older spouse may enable earlier access to superannuation benefits. If your spouse is aged 60 years or over, there will generally be no tax applied to their super benefits.

Managing the transfer balance cap

The transfer balance cap (TBC) limits how much an individual can transfer to the tax-free retirement phase of super in their lifetime. Because the TBC only takes individual wealth into account, couples can maximise the amount they can hold collectively by splitting contributions and balancing their superannuation accounts so that they are both below the TBC threshold.

Refer to our Tax and super page to learn more about the transfer balance cap.

Increase Centrelink entitlements

Super interests held in the accumulation phase are not assessable for Centrelink entitlements. By splitting your contributions to a younger spouse under the Pension Age, you can reduce your super balance and lower your assets for the Centrelink means test if your account is in the retirement phase and their account is in the accumulation phase. Provided you satisfy the income test, reducing your assets in this way could increase your Centrelink entitlements.

What are spouse contributions?

Spouse contributions allow you to make non-concessional (after tax) contributions to your spouse's super account. This can help balance your super accounts, and is an excellent strategy for ensuring that your partner's super won't suffer as a result of a reduction in work hours, or an inability to work. Eligibility criteria, including their age and total super balance, apply to the spouse receiving the contribution(s).

What are the benefits of spouse contributions?

Spouse contributions can help you support your spouse while increasing your super as a couple. Here are some of the benefits to spouse contributions.

Tax offset

If your spouse is not working, or is earning a low income, you may be able to claim a tax offset of up to $540 if you make after-tax contributions to their super. Search 'super-related tax offsets' on the Australian Taxation Office (ATO) website at ato.gov.au for more details on tax offsets for super contributions on behalf of your spouse.

Support the person who supports you

If your spouse is earning a lower income or has taken time off work due to injury, illness, or to take care of a loved one, it can be a challenge for them to build up their retirement savings. By making contributions to your spouse's account, you can help them grow their super balance so that they can retire with confidence.

Your family is our family too

We offer spouse accounts so that you can nurture your nest egg together.

By referring your spouse to our Accumulation Plan, Working Income Stream, or Retirement Income Stream you'll receive a rebate on your account-keeping fee, and your spouse will get a rebate on both their administration fee and account-keeping fee upon joining.^*

Plus there are the benefits that come with being a part of an account rated as Platinum (i.e. in the top 25% of funds) by SuperRatings for at least 12 years in a row!^**

Learn more about our spouse accounts

^* Your spouse should check any relevant exit fees they may incur, or any insurance arrangements that may be forfeited, or any other effects this transfer may have on their benefits, before transferring their superannuation into our fund.

^** In 2021, SuperRatings rated ESSSuper's Accumulation Plan as Platinum for 12 years in a row, and Income Streams as Platinum for 13 years in a row. Refer to our Awards web page for more information.

Emergency Services Superannuation Board (ABN 28 161 296 741) (ESSB), the Trustee of the Emergency Services Superannuation Scheme (ABN 85 894 637 037) (ESSSuper).

Benefits in ESSSuper's Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority. ESSSuper comes under the jurisdiction of the Victorian Civil and Administrative Tribunal.

The information contained in this article is of a general nature only. It should not be considered as a substitute for reading ESSSuper's Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au/pds or by calling 1300 650 161.