Pick up a newspaper, turn on the radio, watch TV, go online – wherever you look or listen, superannuation has been constantly in the spotlight lately.

While there has been much discussion of possible changes to superannuation in the future, one thing remains certain – super is, and will remain, one of the key methods for Australians to save for retirement.

Because super is such a crucial part of most people’s plans for retirement it is important to ensure that you are doing all you can to maximise the benefits superannuation offers. An excellent place to start is by conducting an annual review of how much is going into your super, and, most importantly, whether this amount best meets your saving and investing needs – without incurring unexpected and unnecessary taxes.

Superannuation contributions fall into three categories – employer Super Guarantee, salary sacrificing and voluntary after-tax contributions.

By law, employers must pay 9.5 per cent of your salary into the super fund of your choice as part of what is called the Super Guarantee.

In addition, people can choose to make voluntary contributions to their super by stipulating a set amount to be taken out of their salary each time it is paid, thereby “salary sacrificing” into their super.

These voluntary contributions (also known as concessional contributions) are taxed at the very attractive rate of only 15 per cent instead of at your marginal tax rate, which is likely to be much higher.

However, caps exist on how much you can contribute to your super via a combination of employer contributions and salary sacrifice while still enjoying the 15 per cent tax rate. For 2015-16, a general concessional contribution cap of $30,000 applies for people under 50 years. Those over 50 years can contribute up to $35,000.

If these caps are exceeded in a financial year, the contributions in excess of the cap will be taxed at your full marginal tax rate and penalties may also apply in particular circumstances. With the end of the financial year approaching, now is an important time to ensure you do not exceed your caps.

While at first glance it may seem relatively simple to keep an eye on your super contributions to ensure you do not incur these unintended tax consequences or penalties, it is our experience that unfortunately some people do unwittingly exceed their caps. It may be that they received a pay rise or bonus, resulting in more money automatically going into their super via the employer’s Super Guarantee, and did not recalculate their contribution amounts. At other times, people do not keep up-to-date with changes in tax and superannuation laws and are not aware of the implications for how much they can contribute to super.

Such oversights are easy to make in a busy world. At Falconer Advisers, we are experts at working with clients to ensure they maximise their super contributions without incurring unnecessary tax.

Another way to top up your super is to make voluntary after-tax contributions. These contributions (known as non-concessional contributions) are made once your income has been taxed at its marginal rate.

While such contributions do not enjoy the immediate tax advantages you receive from concessional contributions, there are tax advantages as the earnings on your non-concessional contributions are taxed at only 15 per cent, not your marginal tax rate.

In general, the non-concessional contribution cap for 2015-16 remains the same as it was for 2014-15 – $180,000. However, people under the age of 65 on 1 July in a financial year can also choose to contribute in excess of the $180,000 cap up to an amount of $540,000 over a three year period via the “bring-forward rule”. There are potentially significant tax and savings benefits to be gained by such a move.

Transition to Retirement Pensions

It is also well worthwhile conducting an annual review of your TTRP in the lead-up to the end of the financial year to ensure you do not exceed your superannuation contributions caps.

For those who have been using their TTRP to help pay down debt, it may be that this extra debt-relief assistance is no longer needed and it is now time to adjust your TTRP in light of this. (For more on using super to pay down debt, see our November 2014 blog).

TTRPs also provide a number of very useful ways to reduce tax and an annual review will help ensure your TTRP is structured to ensure you are obtaining all the tax benefits such a pension provides.

Finally, any annual review of superannuation and TTRPs should also include reassessing whether your existing levels of insurance are still in sync with your current needs.

To organise an annual review of your super and/or your TTRP, please call me on 03 6234 2233 or email me on kristian@falconeradvisers.com.au