Before combining your super, ask your other super provider about any fees or charges that may apply, and effect a transfer may have on benefits in your other fund, such as insurance cover. We recommend you consider seeking financial advice.
In some circumstances, insurance through your super will stop if no money (any contribution or rollover) is added to your account for 16 months. See the Insurance in your super guide for more information about when cover stops and what you can do to keep your insurance.
Try to make up for lost time
Whether your career break is planned or otherwise, consider the following points to give your super a boost.
Add to your super by salary sacrificing
For many people, taking a career break can mean your income is reduced. And often, any super contributions you receive are also reduced as a result. To help compensate for this dip in income, consider making extra contributions towards your super – by salary sacrificing – before you take time off. Or, if you’re already on a career break, consider salary sacrificing when you return to work to make up for it.
When you ‘sacrifice’ some of your salary, you make an agreement with your employer to pay this amount straight into your super account instead of your bank account. It will mean a little less take-home pay, but it could have a significant impact on your super balance when you retire.
Salary sacrificing could also reduce your taxable income, which means you might even pay less at tax time. Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues.
Salary sacrificing isn’t for everyone and may affect some Government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you. Those on a lower or middle income may benefit from after tax contributions instead, or a mix of both. As super is generally taxed at 15% (depending on how much you earn), making before-tax contributions to your super can provide a tax-effective way to boost your super savings.
Make the most of government assistance
If you’re already on a career break, you’re probably earning less than what you normally would. Because of this, you may be eligible for a super co-contribution from the Australian Government.
If your yearly income is less than $45,400 (before tax, for the financial year of 2024-2025), and you meet the eligibility criteria, the Government will match 50 cents for every $1 you add to your super from your after-tax income1, up to a maximum of $500.
If you earn more than $45,400, the matching rate gradually reduces until it phases out completely at $60,400. This could mean up to a $500 contribution from the Government. The amount depends on your income. This co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year.
Consider spouse contributions
If you have a partner who will continue to work while you take a career break, there are a few options that might allow you to keep contributing to your retirement savings.
While you can’t combine your superannuation with your partner’s, you may be able to grow your super balance with after-tax contributions from your spouse1. It’s not all for you – this might also benefit them too. Depending on your income, your spouse could be eligible for a tax offset.
Split a super contribution
There’s also the possibility of using contribution splitting – a method of adding to your superannuation that allows your partner to transfer some of their before-tax super into your account. The super they transfer to you must be from a before-tax source. That means super added to their account by their employer, either as part of their super guarantee or via a salary sacrifice arrangement.
You’ll need to make sure you’re eligible to use either of these strategies, but they can both potentially offset some of the contributions you’ll be missing while you’re taking a break.
Think ahead – before and after your career break
Preparing for a career break can help give you peace of mind that you’re still working towards achieving your best possible retirement, even during your time away from work. Finding ways to contribute to your super before and during your break can keep your balance growing while you’re not receiving employer super contributions. When you’re looking into what a career break might mean for your financial future, make sure super is part of the equation.
And remember, if you’re starting a new job when you come back from your break – you should let your new employer know about your super account. If you don’t nominate a super account when you start a new job, your employer will contact the ATO to find your ‘stapled fund’ and will pay your super contributions to that account. If you don’t have an existing super account and don’t choose a fund, your employer will pay your super into their nominated default super fund.
