Robin Bowerman, Head of Retail at Vanguard Investments Australia.
Robin Bowerman, Head of Retail at Vanguard Investments Australia.

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.

Read the ATO’s latest super co-contributions report.

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.



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