The great super giveaway
THE rewards for super fund members taking advantage of government super co-contributions are set out in unambiguous detail in the ATO’s super co-contributions report, released this week.
As the report shows, the Government paid more than $1.2 billion in co-contributions during 2008-09 to 1.4 million members. The average co-contribution was $863.
The high amount paid in total truly underlines the popularity of co-contributions among informed low and middle-income earners.
Often parents would be informing their working children of the opportunities with co-contributions. And many spouses would be telling partners on low-medium incomes about how to obtain no-cost Government contributions.
Women working part-time and in casual jobs have apparently been among the big beneficiaries of co-contributions.
The Government exactly matches personal (non-concessional) contributions to a maximum co-contribution of $1000 for 2009-10, provided assessable income plus reportable fringe benefits and employer super contributions do not exceed $31,920. The Government’s co-contribution then reduces as earnings rise, cutting out when earnings reach $61,920.
Importantly, co-contributions are automatically credited to a member’s super account. It’s a simple, no-worries system.
The commissioner has done some more number-crunching for 2007-08, showing that the number of fund members receiving co-contributions peaked with those in the $40,000-$41,999 income range. Of course, the challenge for lower-earning fund members is to make any personal contributions – depending upon their circumstances, including family responsibilities.
Another interesting statistic from the co-contributions report concerns the incomes of spouses, where applicable, of co-contribution recipients. Again in 2007-08, the largest number of spouses of co-contribution recipients peaked in the $30,000-$34,999 income range.
The figures effectively contradict suggestions sometimes made that many people married to high-earners receive co-contributions.
Listen to the audio podcast:
Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.