What is contribution splitting?
Contribution splitting is where you submit a notice to your partner’s superannuation fund and say hello, please direct some of his (or their) money over to my account.
You can nominate a % or a $ amount for each financial year.
This is different from spouse contributions to super, which may be applicable if you’re a low income earner, working part-time or currently unemployed. Spouse contributions can be attractive due to tax offsets, but this also assumes that you have spare cash available to contribute to super and that you wouldn’t prefer to direct those funds towards other goals.
The ability to split existing super contributions is a simple and accessible way to rebalance the financial scales for families, without requiring additional cash. This is crucial, because the requirement to tip in extra funds (at a time when your family expenses are spiking and income is plummeting), is likely to be so onerous that it is out of reach for many families.
Instead of trying to make the pie bigger, we can instead focus on getting the slices of pie between parents, more equitable.
Families can be actively calculating what is a fair allocation for both parents on two fronts.
Rebecca, does it really matter if it’s all household money?
I would really love to say no. I would love to say that you and your partner, like me and mine, will stay happily together for decades and retire (or begin accessing our super) in perfect harmony.
That is not what the world looks like.
This issue is a massive contributor as to why there is a 28% superannuation gap between men and women at the age of 60-64 and a 35% superannuation gap in the peak earning years of 45-49. This is also why women over the age of 55 are the fastest growing cohort of people experiencing homelessness.
My superannuation balance contributes to my sense of financial security.
Ensuring that I am not directly financially penalised for doing the fundamentally amazing job of carrying, birthing and caring for our children sets an important tone for our relationship with each other, and with our money.
It is also important to note that this is not actually linked to the life event of having children. This means that if your child is now 7 and you’re thinking ‘honey, we gotta talk’, it’s not too late. You can start today. It might take a couple of financial years to square it all up (because you still have to play within contribution cap rules), but it’s absolutely achievable.
Women, men, let’s get this done.
(If you are unsure on the actual administration of this, talk to your financial adviser or superannuation fund and get their help.)
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