Salary sacrifice into your super

How super salary sacrifice works

Salary sacrifice is the process of redirecting a percentage of your salary or wage into something else. You can set up a salary sacrifice agreement with your employer to help pay off a car, your mortgage payments or to top up your super.

Salary sacrifice into your super fund means, come payday, a percentage of your wage will be sent to your super account rather than into your bank account. These are classed as concessional contributions (more on this later!), because the money that’s sent to your super account is diverted before you’re charged any income tax on it. This is the main benefit of salary sacrificing into your super.

You can elect how much of your pre-taxed income you want to send to your super account instead, although limits do apply (we’ve outlined these limits below).

Super salary sacrificing has many benefits

• Pre-tax super contributions. Salary sacrificing is classed as a concessional contribution, meaning it’s part of your pre-tax income. This money will instead be taxed at the reduced super tax rate of 15%, rather than your marginal tax rate which could be as high as 45%.
• Set-and-forget strategy. Salary sacrificing into your super is a great way to make passive contributions to your super. Once you’ve set it up there’s nothing else you need to do – the contributions will automatically be made each time your employer pays you.
• Your employer handles the admin. Your employer will set up your salary sacrifice contributions with your super fund, so there’s not much admin involved for you.
• Benefit from compound returns. By making regular contributions to your super from a young age, you’ll benefit from compounded investment returns.
• No fees. There are no fees charged to make concessional contributions to your super via salary sacrifice.
• Benefits to those earning more than $37,000. Those with a salary above $37,000 stand to benefit the most from salary sacrificing into super. Instead of paying the marginal tax rate of up to 45%, that income will instead only be taxed at 15%.

Expert insight: Preparation is everything

"Salary sacrificing into superannuation is like planning for a long journey. You might take a small detour now by reducing your take-home pay, but it ensures a smoother and more comfortable ride into retirement. It's all about the foresight and preparation."

Parker Silk

Financial adviser, Financial Spectrum

What to consider before salary sacrificing into super

Salary sacrificing has many benefits, but there are also a few things to consider before setting it up.

• Less money at payday. If you elect to send a portion of your salary to your super you’ll end up with less money in your bank account come payday.
• You can’t access the money. Once you’ve sent the money to your super fund, you can’t access this money until you retire or reach your preservation age. So it’s important to ensure you won’t need the money to meet your financial obligations, such as rent, bills or in the event of an emergency.
• Limits apply. There are limits as to how much you can contribute to your super, which are outlined below.
• Not worth it if you earn below $37,000. If you earn below $37,000 your income is only taxed at 19%, so it might not be worth salary sacrificing as you’d only be taxed 4% less.

Super salary sacrifice limits

There's no limit on how much your can choose to salary sacrifice into your super. However, as salary sacrificing is classed as a concessional contribution, there are limits as to how many concessional contributions you can make each year. Concessional contributions are contributions made from your pre-tax income (not the voluntary contributions you choose to make directly from your bank account). Your concessional contributions can’t be more than $27,500 per year, which includes both your salary sacrificed contributions and those made by your employer as part of the super guarantee.

As an example, let’s say you earn $150,000 a year. To meet the 11.50% super guarantee requirement your employer needs to contribute $15,000 to your super a year. This means you can only make up to $12,500 worth of additional pre-tax contributions.

If you salary sacrifice more than your annual concessional contributions cap, the extra amount won't be taxed at the reduced super tax rate.

Super salary sacrifice example

Salary sacrificing small amounts into your super can add up to a big amount over time. Take a look at some of the below examples, which are based on projections using Industry Super Australia's salary sacrifice calculator.

Let's pretend....

You're 30 years old, earning $80,000 a year and currently have a super balance of $50,000. If you added just $1000 extra into your super each year (or around $19 a week), you could retire with an additional $67,300 in your super. If you upped your contributions to $2000 a year (or around $38 a week), you could retire with an additional $134,500.

How to set up super salary sacrifice

If you want to salary sacrifice into your super this is something you can arrange directly with your employer instead of with your super fund. Simply ask your employer, or the accounts team who manages your salary payments, if they can start a salary sacrifice arrangeemnt for you.

Make sure you check the following:

• Decide how much of your pay you'd like to sacrifice into super each pay period
• Make sure your annual salary sacrifice amount plus the amount your employer already pays you into super doesn't exceed your contribution limit
• Make sure your employer will continue to pay you the full super guarantee amount

How else can I make contributions to my superannuation?

There are four main ways you can contribute to your super.

• Employer contributions. This is the main source of money paid into an individual’s superannuation account. According to the superannuation guarantee, an employer must pay at least 11.50% of an employee’s gross salary into their super account every quarter.
• Concessional contributions. You can arrange for your employer to pay some of your pre-tax salary into your super fund as an additional contribution, known as salary sacrifice. But remember, your contribution allowance is capped at a maximum of $27,500 a year including all your employer and concessional contributions.
• Non-concessional contributions. A non-concessional contribution is one you make from your post-tax salary. This means you’ve already received the money into your bank account and paid the full tax rate. The cap for these contributions is currently $100,000 a year.
• Government contributions. If you earn below $36,813 you may be eligible for the government super co-contribution. This means that if you choose to make non-concessional (post-tax) contributions, the government will add $0.50 for each dollar you deposit up to $500.

More tips to grow your super

Salary sacrificing is just one of the many strategies you can use to grow your super balance. To learn about the other ways you can increase your balance, take a look at our guide to growing your superannuation.

The easiest way to boost your super is to make sure you're in a low-fee, high-performing super fund.

Ready to compare super funds?

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1 - 17 of 429

Name	Last 1 year performance (p.a.)	Last 3 year performance (p.a.)	Last 5 year performance (p.a.)	Last 10 year performance (p.a.)	Fees on $50k balance (p.a.)
Promoted Promoted Aware Super Future Saver - MySuper Lifecycle High Growth Industry fund Lifestage Higher risk	Last 1 year performance (p.a.) +11.31%	Last 3 year performance (p.a.) +6.14%	Last 5 year performance (p.a.) +8.28%	Last 10 year performance (p.a.) +8.93%	Fees on $50k balance (p.a.) $497	Go to siteMore Info Compare	A lifecycle super fund weighted heavily towards high growth assets, targeted to people 55 and under.
Promoted Promoted Vanguard Super SaveSmart - High Growth Higher risk	Last 1 year performance (p.a.) +14.3%	Last 3 year performance (p.a.) N/A	Last 5 year performance (p.a.) N/A	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $270	Go to siteMore Info Compare	This fund aims for higher growth over the long term. It invests heavily in Australian and international shares, including a small amount of exposure to emerging markets shares.
Promoted Promoted Virgin Money Super - LifeStage Tracker Lifestage	Last 1 year performance (p.a.) +13.87%	Last 3 year performance (p.a.) +6.55%	Last 5 year performance (p.a.) +7.82%	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $363	Go to siteMore Info Compare	Your fund's asset allocations adjust automatically as you age, offering you more growth opportunity when you're younger and lower-risk investments as you approach retirement.
Aware Super Future Saver - MySuper Lifecycle High Growth Industry fundLifestageHigher risk	Last 1 year performance (p.a.) +11.31%	Last 3 year performance (p.a.) +6.14%	Last 5 year performance (p.a.) +8.28%	Last 10 year performance (p.a.) +8.93%	Fees on $50k balance (p.a.) $497	Go to siteMore Info Compare
Vanguard Super SaveSmart - High Growth Higher risk	Last 1 year performance (p.a.) +14.3%	Last 3 year performance (p.a.) N/A	Last 5 year performance (p.a.) N/A	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $270	Go to siteMore Info Compare
Virgin Money Super - LifeStage Tracker Lifestage	Last 1 year performance (p.a.) +13.87%	Last 3 year performance (p.a.) +6.55%	Last 5 year performance (p.a.) +7.82%	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $363	Go to siteMore Info Compare
Australian Retirement Trust - High Growth Industry fundHigher risk	Last 1 year performance (p.a.) +12%	Last 3 year performance (p.a.) +8.02%	Last 5 year performance (p.a.) +9.01%	Last 10 year performance (p.a.) +9.4%	Fees on $50k balance (p.a.) $517	Go to siteMore Info Compare
Spaceship - GrowthX Higher risk	Last 1 year performance (p.a.) +17.89%	Last 3 year performance (p.a.) +5.89%	Last 5 year performance (p.a.) +10.56%	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $711	Go to siteMore Info Compare
Hostplus Indexed Balanced Industry fund	Last 1 year performance (p.a.) +12.94%	Last 3 year performance (p.a.) +6.22%	Last 5 year performance (p.a.) +7.39%	Last 10 year performance (p.a.) +7.83%	Fees on $50k balance (p.a.) $153	Go to siteMore Info Compare
AMP Super MySuper Lifestages 1970s Lifestage	Last 1 year performance (p.a.) +11.88%	Last 3 year performance (p.a.) +5.66%	Last 5 year performance (p.a.) +7.02%	Last 10 year performance (p.a.) +7.68%	Fees on $50k balance (p.a.) $506	Go to siteMore Info Compare
Australian Ethical Super International Shares Green CompanyEthicalHigher risk	Last 1 year performance (p.a.) +19.88%	Last 3 year performance (p.a.) +8.32%	Last 5 year performance (p.a.) +10.65%	Last 10 year performance (p.a.) +10.23%	Fees on $50k balance (p.a.) $643	Go to siteMore Info Compare
CFS FC MySuper - Lifestage 1985-89 LifestageHigher risk	Last 1 year performance (p.a.) +15.44%	Last 3 year performance (p.a.) +6.66%	Last 5 year performance (p.a.) +7.47%	Last 10 year performance (p.a.) +7.83%	Fees on $50k balance (p.a.) $375	Go to siteMore Info Compare
UniSuper - Sustainable High Growth Finder AwardIndustry fundEthicalHigher risk	Last 1 year performance (p.a.) +16.11%	Last 3 year performance (p.a.) +5.45%	Last 5 year performance (p.a.) +9.15%	Last 10 year performance (p.a.) +10.01%	Fees on $50k balance (p.a.) $321	Go to siteMore Info Compare
HESTA Balanced Growth Industry fund	Last 1 year performance (p.a.) +9.69%	Last 3 year performance (p.a.) +5.83%	Last 5 year performance (p.a.) +7.02%	Last 10 year performance (p.a.) +7.67%	Fees on $50k balance (p.a.) $472	Go to siteMore Info Compare
Vanguard Super SaveSmart - International Shares Higher risk	Last 1 year performance (p.a.) +20.29%	Last 3 year performance (p.a.) N/A	Last 5 year performance (p.a.) N/A	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $280	Go to siteMore Info Compare
CFS FC MySuper - Lifestage 1975-79 Lifestage	Last 1 year performance (p.a.) +14.95%	Last 3 year performance (p.a.) +6.37%	Last 5 year performance (p.a.) +7.23%	Last 10 year performance (p.a.) +7.71%	Fees on $50k balance (p.a.) $380	Go to siteMore Info Compare
Australian Retirement Trust - International Shares Index (unhedged) Finder AwardIndustry fundIndexed investmentHigher risk	Last 1 year performance (p.a.) +18.92%	Last 3 year performance (p.a.) +9.67%	Last 5 year performance (p.a.) +11.86%	Last 10 year performance (p.a.) +12.55%	Fees on $50k balance (p.a.) $192	Go to siteMore Info Compare
Hostplus Australian Shares Industry fundHigher risk	Last 1 year performance (p.a.) +10.4%	Last 3 year performance (p.a.) +7.33%	Last 5 year performance (p.a.) +8.35%	Last 10 year performance (p.a.) +9.05%	Fees on $50k balance (p.a.) $368	Go to siteMore Info Compare
Vanguard MySuper - Lifecycle Age 47 and under Lifestage	Last 1 year performance (p.a.) +14.29%	Last 3 year performance (p.a.) N/A	Last 5 year performance (p.a.) N/A	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $280	Go to siteMore Info Compare
Virgin Money Super Indexed Overseas Shares Indexed investmentHigher risk	Last 1 year performance (p.a.) +21.04%	Last 3 year performance (p.a.) +10.95%	Last 5 year performance (p.a.) +12.71%	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $385	Go to siteMore Info Compare

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The information in this table is based on data provided by SuperRatings Pty Limited ABN 95 100 192 283, a Corporate Authorised Representative (CAR No.1309956) of Lonsec Research Pty Ltd ABN 11 151 658 561, Australian Financial Services Licence No. 421445. In limited instances, where data is not available from SuperRatings for a product, the data is provided directly by the superannuation fund.

*Past performance data and fee data is for the period ending July 2024

Written by

Alison Banney

Editor

Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. See full bio

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