Here's why Australians invested $55.7 billion via superannuation contributions last year

Here's why Australians invested $55.7 billion via superannuation contributions last year

Australians made $55.7 billion worth of voluntary personal superannuation contributions over the 12 months ending 31 March, up 26.9%.

The Australian Prudential Regulation Authority (APRA) says the surge in member contributions resulted from higher personal contributions.

Personal contributions are those made by individual workers using their after-tax income.

They are separate from salary sacrificed amounts and employer contributions made through the compulsory Super Guarantee scheme.

Employer contributions increased by 10.3% over the year to $147.1 billion, according to the figures.

As of 31 March, there was $4,129 billion invested in superannuation funds, up 5.9% over the past 12 months.

About $2,890.8 billion was in APRA-regulated superannuation funds, up 7.4%.

About $1,005.5 billion was in self-managed super funds (SMSFs), up 2.7%.

APRA reports an 11.6% increase in benefit payments to $127.5 billion in the year ending 31 March.

The increase is due to a 9.1% rise in lump sum payments to $70 billion and a 14.9% increase in pension payments to $57.6 billion.

Australia has an aging population, so it is to be expected that superannuation benefit payments will rise as more baby boomers retire.

Why are Aussies contributing more to superannuation?

APRA did not explain why Australians ploughed 26.9% more funds into superannuation over the past 12 months.

However, we can assume that the two biggest benefits of making personal superannuation contributions played a role in that decision.

The first big benefit of regular superannuation contributions is compounding. The longer your money is invested, the more effective the compounding.

The second big benefit is the tax deduction that comes with some personal contributions. They are called concessional contributions.

Research shows more than 1 in 2 Australians have little or no understanding of the tax concessions available via their superannuation. This means they are likely missing out on thousands in tax savings.

How to get a tax break by investing in your super

If you make concessional contributions, you will only pay 15% tax on the money you contribute with your after-tax income.

That's half the 30% tax rate that people earning between $45,000 and $135,000 per annum (FY25 rates) will pay. And it's an even bigger tax saving if you're earning between $135,001 and $190,000 per annum and paying 37%. Or earning above $190,001 and paying 45%.

There are conditions to the tax break.

These include not exceeding the concessional contribution cap per financial year, which is $30,000 for FY25.

Be careful with this rule though, as that $30,000 includes your employer contributions and any salary sacrificed amounts you've organised.

So, you need to calculate your personal contributions carefully so you don't exceed the $30,000 limit in one financial year.

You'll also need to notify your superannuation fund how much money you have deposited in personal contributions for the year. It's a simple form to complete. Send it to your superannuation fund, and it will deduct the 15% tax you owe from your contributions.

Then, you declare your personal contribution amount in your tax return to get your tax break.

There are other matters to consider, so you should read about personal contributions at the Australian Taxation Office website.

Are your super savings on track?

The ASFA Retirement Standard dictates that singles need $595,000 in superannuation by age 67 to fund a 'comfortable' retirement.

Couples need $690,000.

These figures assume you own your home debt-free and receive a part-age pension from age 67. See pension rates at the relevant government website.

ASFA defines a 'comfortable' retirement as being able to pay for the basics plus many extras, such as private health insurance, exercise and leisure activities, occasional restaurant meals, a domestic trip annually, and an overseas trip every seven years.

Here are the superannuation savings you need now, according to your age, for your retirement to be on track:

If you're 25 years old, your superannuation balance should be $26,000.

If you're 30 years old, your superannuation balance should be $66,500.

If you're 35 years old, your superannuation balance should be $111,500.

If you're 40 years old, your superannuation balance should be $168,000.

If you're 45 years old, your superannuation balance should be $226,000.

If you're 50 years old, your superannuation balance should be $296,000.

If you're 55 years old, your superannuation balance should be $377,000.

If you're 60 years old, your superannuation balance should be $469,000.

If you're 65 years old, your superannuation balance should be $571,000.

You can find more detailed tools to help you determine your individual super balance needs.

(Source: The Motley Fool, March 2025)

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