Super Splitting: Balancing Retirement Savings Between Partners
When one partner earns more than the other, super balances can become lopsided. Contribution splitting lets you share concessional contributions with your spouse, potentially saving tax and improving Age Pension eligibility.
How Contribution Splitting Works
You can split up to 85% of your concessional (before-tax) contributions with your spouse. This includes:
- Employer Super Guarantee contributions
- Salary sacrifice contributions
- Personal deductible contributions
The split contributions are transferred from your super account to your spouse's account. Your spouse must be either:
- Under 65, or
- Aged 65-67 and meets the work test
Why Split Contributions?
1. Balance Super for Age Pension
The Age Pension assets test treats super as an assessable asset once you reach Age Pension age. Two smaller balances can be structured more efficiently than one large balance, especially if one partner is younger.
2. Allow Younger Spouse to Access Super Earlier
If there's an age gap, the younger spouse can potentially access their share earlier (once they reach their preservation age) while the older partner's funds remain preserved.
3. Reduce Transfer Balance Cap Risk
The transfer balance cap ($1.9 million in 2024/25) limits how much you can move to tax-free pension phase. Splitting helps both partners stay under the cap.
Note: Contribution splitting doesn't provide any immediate tax benefit—the 15% contributions tax has already been paid. The benefits come later through improved structuring.
The Splitting Rules
- Timing: You can only split contributions from the previous financial year
- Maximum: 85% of concessional contributions (up to the concessional cap)
- Application: Submit a contributions splitting form to your super fund
- Deadline: Before the end of the financial year, or before you roll over/withdraw
Example: Contribution Splitting in Action
John (55) receives $30,000 in employer SG and salary sacrifice. His wife Mary (50) has minimal super due to career breaks.
John splits 85% of his contributions ($25,500) to Mary each year. Over 10 years, Mary accumulates over $300,000 (including growth), which she can access at 60—five years before John.
This gives the couple more flexibility and potentially better Age Pension outcomes when John reaches 67.
Contribution Splitting vs. Spouse Contributions
Don't confuse these two strategies:
- Contribution splitting: Move YOUR contributions to your spouse's account
- Spouse contributions: Make contributions directly to your spouse's account (may get a tax offset)
Both can be used together to build up a lower-earning spouse's super balance.
How Talk Through Wealth Helps
Model the impact of contribution splitting on your household:
- Compare split vs. non-split scenarios over time
- See how balanced accounts affect Age Pension eligibility
- Model access strategies based on different preservation ages
- Track transfer balance cap implications for both partners
- Optimise the split percentage for your situation
Optimise Your Couple's Super
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