Managing finances as a couple often comes with unique challenges, and superannuation is no exception. For couples in Australia, super splitting can be a smart financial planning strategy to optimise retirement savings, balance super accounts, and even reduce tax liabilities. Whether you’re a retiree, a young professional, or part of a growing family, understanding how to make the most of super splitting can make a big difference. Let’s explore this approach in detail to see how it fits into your financial goals.

What Is Super Splitting?

Super splitting allows one member of a couple to transfer a portion of their superannuation contributions to their partner’s account. This is typically done with employer contributions or salary sacrifices from the higher-earning partner. However, it’s worth noting that super splitting applies only to concessional contributions, which are before-tax contributions, such as employer contributions or salary sacrifice amounts.

Benefits of Super Splitting

Super splitting is a flexible tool with benefits for couples in various life stages and situations:

• Optimising Retirement Savings: By balancing superannuation accounts, couples can avoid exceeding the concessional contribution caps, which could lead to hefty tax penalties.

• Maximising Tax Efficiency: If one partner earns less or is in a lower tax bracket, super splitting can help minimise taxes paid while maximising combined wealth.

• Enhancing Retirement Options: Couples with balanced super balances may have better access to tax-free benefits in retirement due to limits on tax-exempt assets in pension phases.

Super Splitting Strategies for Every Stage of Life

Retirees

For retirees, super splitting can help balance super balances to maximise the tax-free benefits of retirement income. Couples who hit or near the transfer balance cap—currently $1.9 million in Australia—can use super splitting to move funds into their partner’s lesser-used account, thus making the most of their combined retirement savings. This strategy can also ensure that any remaining super funds are transfer-balanced appropriately for estate planning purposes.

Key Tip: Retirees should work with their financial adviser to maximise tax efficiencies and utilise super balances fully before transitioning to pension accounts.

Young Professionals

For young professionals, super splitting offers a proactive way to equalise retirement savings early on. This can be especially useful if one partner is taking time off from paid work to study, travel, or start a family. Balancing accounts early in life can ensure that compounding interest works more evenly for both accounts over time.

Key Tip: Review your accounts annually and focus on splitting concessional contributions to keep both funds growing consistently.

Families

Supersplitting can also be highly advantageous for families where one partner stays home to care for children. By transferring super from the working partner to the non-working or lower-income-earning partner, families ensure that both partners maintain long-term financial security. This ensures that the stay-at-home parent doesn’t fall behind in retirement savings as a result of career breaks.

Key Tip: Plan your super splitting in line with maternity or paternity leave, and ensure both partners are on track for comfortable retirement balances.

Misconceptions and Pitfalls to Avoid

Super splitting isn’t without its challenges, especially when misunderstood. Some of the common misconceptions include:

• Immediate Access: Super splitting does not allow earlier access to super funds. The rules governing the release of superannuation (e.g., reaching preservation age) still apply, even after funds are transferred.

• High Fees: While splitting might involve minimal administrative fees depending on your fund, overuse or poor planning could make it less beneficial. Analyse fees and confirm your fund’s splitting policy before proceeding.

• One-Size-Fits-All: While this strategy works well for many couples, it must be tailored to individual goals, earnings, and cash flow.

Expert Tips for Optimising Super Splitting

• Start Early: Implement super splitting as soon as you recognise the disparity in super balances. The earlier you start, the more time you have to balance accounts.

• Monitor Contribution Caps: Remember that concessional contributions are capped at $30,000 per financial year. Ensure you don’t exceed these limits to avoid penalties.

• Include It in Your Overall Strategy: Think of super splitting as part of your broader financial planning goals. Combine it with other strategies like salary sacrificing and spouse contributions for maximum benefit.

• Seek Advice: Super splitting rules can vary, and each couple’s circumstances are unique. Consulting a professional financial adviser ensures you make informed and strategic decisions.

Time to Take the Next Step!

Super splitting can be a game-changer for couples who want to maximise retirement wealth, optimise tax outcomes, and ensure both partners enjoy financial security. Whether you’re just starting out or planning your retirement, there’s immense potential to explore this strategy.

For personalised guidance tailored to your unique situation, book a consultation with a professional financial adviser today. Start optimising your super and building a more secure financial future—together.

If you would like to improve your current investment strategies or are looking to start your investment journey, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.

Explore more articles