Simple super tips for new parents

16 February 2024

If you’re thinking about starting a family or have recently done so, then planning for your future, and that of your loved ones, has never been more important.

Expanding your family is an exciting time, but it can be daunting too. There are many steps to preparing for a baby’s arrival, as well as the adjustment to your lifestyle (and finances) when the newest member of your family arrives. As such, the pressures of financial planning is often top-of-mind. But it doesn’t need to be complicated.

Find and consider consolidating your super

If you or your partner are planning to take time away from work when your child arrives, or you’re already on parental leave, it might help to locate any lost super and consolidate it all in one place. This could save you on fees, avoid duplicate insurance policies, and make it a little easier to get visibility of your balance. Knowing how much you have makes it easier to decide if you’ll need to top up your balance while you’re not working, or working less.

Do you know how many super accounts you have? If you’ve had more than one job, you could have ‘lost’ super. According to the Australian Tax Office (ATO), Australians had amassed $16 billion in lost and ATO-held super as of 30 June 2022¹.

Find any lost super

Doing a simple super search could help track down any money that belongs to you. You can find any lost super you may have using the ATO online services through myGov. Alternatively, if you’re an AustralianSuper member, you can search for lost super by logging into your account and we can help track down your lost super.

Consider consolidating your super into one account

If you do find lost super, you might want to consider consolidating those accounts into one.

Before making a decision to combine your super, look out for any fees or charges that may apply. Make sure you also understand the impact of combining your accounts on any additional benefits, such as insurance. We recommend you consider seeking financial advice.

Make sure your level of insurance fits your growing family

Nobody likes to talk about death. But the only thing scarier than dying is the thought of how your family would survive financially if you were no longer around. So when it comes to providing security for your family, a simple review of your insurance now can provide you with peace of mind.

A change in your family structure is one of the 4 key times in life to review your super. A growing family can mean a move to a bigger home, or buying a bigger car, or it could mean taking on more work or a new job. Make sure any changes are covered by reviewing your levels of cover, and needs. Superannuation funds generally offer basic cover when you open an account², but it’s important to understand that you can apply to adjust this level of cover to suit your life stage.

In some circumstances, insurance cover linked to your super will lapse if there are no contributions being made into your account. Be sure to have a look at the insurance cover you have through your super, as well as check any special conditions that might apply if you’re off work.

While checking in on your insurance, you should consider nominating a beneficiary if you haven’t already done so. By nominating a beneficiary, you can decide what happens to your super including any insurance entitlements, if you die.

Adding to your partner’s super

If you’re a couple, you may want to consider ways to make your superannuation contributions part of your bigger financial plans. While you can’t combine your superannuation with your partner’s, you may wish to boost the super balance of your significant other while they’re on a parental break. There are a couple of ways you can do this. 

Contribute with an after-tax payment

You may be able to grow your partner’s super balance with a contribution from your take-home pay. This might also benefit you too, as you may be eligible for a tax rebate. 

Split a super contribution before-tax

There’s also the possibility of using contribution splitting. This is a method of adding to your partner’s superannuation by transferring some of your before-tax super into their account. The super you transfer must be from a before-tax source. This includes super added to your account by your employer, either as part of your 11% Super Guarantee, or via a salary sacrifice arrangement.

Exploring these types of strategies to see if they’re right for you and your family can potentially offset some of the contributions you or your partner will be missing while on parental leave. This can make a difference when it comes time to retire. You’ll just need to make sure you’re eligible to use either of these strategies.

Get the most out of earning less with a super co-contribution

If you’re on parental leave, you’re probably earning less than what you normally would. If this is the case, and your yearly income is less than $58,445 (before tax, for the financial year of 2023-2024) and you make an after tax contribution to your super, you may be eligible for a super co-contribution from the Australian Government.

Top up your super with a co-contribution

The Australian Government makes co-contributions to help low and middle-income earners boost their retirement savings. These co-contributions can also help before you retire, so it’s worth checking if you’re eligible to receive them while you’re on parental leave.

The government will match 50 cents for every $1 you add to your super from your after-tax income (up to a maximum of $500 a year) if you:

• make after-tax contributions to your super,
• earn $43,445 or less a year before tax (financial year 2023-24), and
• meet other eligibility criteria.

If you earn more than $43,445 in the financial year 2023-24, the matching rate gradually reduces until it phases out completely at $58,445. This co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year.

Before making additional super contributions, consider your financial circumstances, contribution caps that may apply, and tax issues. We recommend you consider seeking financial advice.

Prepare to go back to work

It’s also important to think about life after parental leave, so if you’re starting a new job when you come back from your break – remember to let your new employer know which super fund you are with, to ensure your payments are made to your nominated account.

By taking the time to evaluate your super options, you’re preparing to look after your growing family, and freeing yourself from having to think about the above points too much once your baby arrives.