If concessional (tax-deductible) super contributions are the ideal way for people to boost their tax refunds, non-concessional (non-tax-deductible) contributions are the ideal way for people to boost their future retirement incomes. 

Concessional contributions include employer super guarantee contributions, and any voluntary salary sacrifice amounts. Working people can top these up to the limit of $30,000 by putting in a lump sum in the next two months, by June 30. That is likely to result in a very handy tax refund.

Non concessional contributions don’t give a tax deduction, but their limits are much higher, enabling the rapid buildup of total super balances and thus future retirement incomes. The more money we have in super when we retire usually the higher our retirement income, and the more options to enjoy life.  

The limit on non-concessionals is $120,000 per year. So if we have significant savings in the bank and are in the latter part of our working career, a healthy non-concessional contribution could be a very smart move.

An extra $100,000 in super that is paying us five per cent per annum income will mean an extra $5,000 a year to live on, or $416 per month, almost $100 per week. Obviously an extra $50,000 will mean almost $50 per week more retirement income.

If the $50,000 is invested ten years before retirement it should grow very nicely with compound interest in the lowly taxed super environment over that time. In fact it should double, so $50,000 put in now should mean an extra $100 per week of retirement income in ten years’ time.

The money to make non-concessional contributions can come from any source. It could be an inheritance, a property sale, downsizing, a work bonus, an unused leave payout, or just regular savings. As an aside, it might be best to do a concessional contribution in some of those circumstances.  

However, sticking with non-concessional contributions, there are no entry taxes reducing our balance when we make them, unlike concessional contributions. All the money we put in remains in the super fund to grow for our future benefit.

The “bring forward rule” also allows us to bring forward two future years of non-concessionals and do three years’ worth immediately, $360,000, provided we make no more such contributions for three financial years.

So if we have a large sum available such as from an inheritance or property sale, we may be able to put $360,000 in super in a single amount. That should boost our retirement income by $18,000 per year or $350 per week. Of course professional advice can help choose the best move.