Ask the Expert: There’s more than one way to boost your super in a cost-of-living crisis

Question 1

I am 45, have three children in high school and a large mortgage.

I am struggling to pay the bills, let alone think about retirement.

Are there any ways to boost my retirement savings that don’t cost too much today?

Boosting retirement savings doesn’t necessarily start with putting more money into super.

A good first step is making sure the super already being contributed is working efficiently. That includes understanding how the account is invested.

Most people have decades between age 45 and the point at which all their retirement savings will ultimately be spent, so the mix between growth and defensive investments can have a significant effect over time.

Fees matter too. Administration and investment fees are deducted from the account regardless of household cash flow, so comparing the fees being paid against similar super options can identify money that could otherwise remain invested.

It’s also worth checking insurance held through super. Life, total and permanent disability and income protection premiums can provide valuable protection, particularly for someone with children and a mortgage.

But premiums are deducted from super, so understanding what cover is held, how much it costs and whether there are duplicate policies is important.

Subscribe here for our FREE Tuesday and Thursday newsletter

Email address

Subscribe

Then there are opportunities to add relatively small amounts.

Salary sacrifice can allow additional contributions to be made from pre-tax salary.

And for eligible lower and middle-income earners, a personal after-tax contribution can attract a government super co-contribution of up to $500. For 2026-27, the co-contribution begins reducing once income exceeds $49,293 and cuts out at $64,293.

Eligible people with adjusted taxable income of $37,000 or less may also receive the Low Income Super Tax Offset of up to $500, which is generally paid automatically.

So when household finances are stretched, improving retirement savings isn’t only about contributing more.

Investment settings, fees, insurance costs, government incentives and small additional contributions can all make a difference over time.

Question 2

We are a retired couple aged 61 and 67. We own our home and have a property settling in early September with approximately $1.8 million coming to us.

Which industry pension fund should we look at, should we have the money in pension or accumulation accounts, and could we draw around $120,000 a year to live on?

There are several ways super and pension accounts can be used to help structure retirement savings, but the starting point is understanding how much of the $1.8 million can be contributed to super.

For 2026-27, the standard non-concessional contribution cap is $130,000 per person. Depending on age, existing super balances and previous contributions, the bring-forward rules can allow an eligible person to contribute up to $390,000.

Other contribution options may include concessional (pre tax). However, to benefit from this type of contribution you would generally need to have sufficient taxable income in the financial year in which the contribution is made.

You may also be eligible to make downsizer contributions. Eligibility is subject to specific criteria, including satisfying the applicable property ownership period and the requirement for the sale of the property to qualify, either full or partially, for the main residence CGT exemption.

Once money is in super, eligible amounts can then be transferred into an account-based pension.

The current general transfer balance cap is $2.1 million per person, although each person’s available cap can vary depending on their history. Money can also remain in accumulation, so retirement savings don’t necessarily have to be entirely in pension mode.

Pensions and accumulation accounts are taxed differently and pensions also have minimum annual withdrawal requirements. The minimum is currently 4 per cent for someone under 65 and 5 per cent from age 65 to 74.

Drawing $120,000 from $1.8 million equates to about 6.7 per cent in the first year. Whether that level of spending can be maintained through to age 90 depends on investment returns, inflation, fees and how spending changes through retirement.

Rather than starting with which industry fund to choose, it can be useful to first understand the structure required.

When comparing funds, factors such as investment options, administration and investment fees, pension functionality, service and beneficiary options are all relevant. Past investment returns alone don’t tell the whole story.

Question 3

I am fortunate to have a government defined benefit super pension. I also have a separate superannuation account that I don’t need to access and sometimes add to.

Are there any implications I need to know about regarding this other account? I am 71 and have been retired for about two years.

Receiving a defined benefit pension doesn’t prevent someone from also holding a separate accumulation account, but the two interests can interact with several superannuation rules.

The first issue is the transfer balance cap. Defined benefit pensions are given a special value for transfer balance purposes, generally based on the annual pension payment and a prescribed conversion factor.

That value may use some or all of the person’s personal transfer balance cap, affecting how much of a separate accumulation balance can later be moved into a retirement-phase account-based pension.

There is also a defined benefit income cap. For 2026-27, this is $131,250. If income from certain defined benefit pensions exceeds that amount, part of the pension may receive less favourable tax treatment.

The precise outcome depends on whether the pension comes from a taxed or untaxed source.

The separate accumulation account can remain invested without being converted to a pension. Unlike an account-based pension, an accumulation account has no compulsory annual withdrawal. However, investment earnings within accumulation are generally taxed at up to 15 per cent.

At age 71, contributions can still generally be accepted, subject to the applicable contribution caps, total super balance rules and the type of contribution being made. Different restrictions begin to apply around age 75.

The main figures to check are the defined benefit pension’s value for transfer balance purposes, the available personal transfer balance cap and the total super balance recorded by the Australian Taxation Office. These determine whether keeping, contributing to or later converting the separate account has any additional consequences.

Paul Johnston and Linda Panaszek are financial advisers within the IFS Trusted Advice Network.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.