Salary Sacrificing - how it can help supercharge your super
If you’re earning a steady income and starting to think about how to get ahead financially, there’s one easy strategy that can be overlooked: salary sacrificing into your super.
It’s a small move that can make a big difference. It can help you to save on tax, while growing your super for the future. And the best part? You don’t have to give up much. Even putting aside an extra 2% of your salary can really add up over time.
In this guide, we’ll walk you through how it works, show you the potential benefits with real examples, and share a few tools to help you get started.
What is salary sacrificing?
Salary sacrificing is when you ask your employer to redirect a portion of your before-tax salary into your superannuation account. This is in addition to your employer’s standard 12% Super Guarantee (SG) contributions.
Why do this? Because these contributions are usually taxed at just 15%, potentially a much lower rate than your marginal income tax rate.
A quick example: Salary sacrificing 2% and earning $100,000 a year
| PAY | No salary sacrifice | Salary sacrifice |
|---|---|---|
| $100,000 | $100,000 | |
| $0 | $2,000 | |
| $100,000 | $98,000 | |
| $22,788 | $22,148 | |
| $0 | $300 | |
| $22,788 | $22,448 | |
| $340 |
| SUPER | No salary sacrifice | Salary sacrifice |
|---|---|---|
| $12,000 | $12,000 | |
| $0 | $1,700 | |
| $12,000 | $13,700 |
Net tax saved: $340
Extra amount added to super (after contributions tax): $1,700
Effective cost to you: Only $1,360
The long-term impact of an extra 2%
Now imagine you keep that up from age 35 to 67. Assuming 6% average annual investment returns (a reasonable long-term assumption for a Balanced investment), and quarterly contributions, you could end up with approximately $170,000 more in your super just from this small, consistent effort.
And remember: this is on top of your employer contributions and any other super growth. It’s the power of compounding in action. Keep in mind that markets move up and down and performance is not guaranteed.
Reasons it could be worth starting to salary sacrifice
- You've got time on your side
Every extra dollar has decades to grow, and thanks to compound returns, the earlier you start, the more opportunity for gains.
- It's easier to plan when your income is stable
When your earnings are more consistent, it's a great time to put small, regular strategies in place, like salary sacrificing. You can lock in extra contributions without it affecting your lifestyle too much and let the power of compounding do the rest over time.
- It's low effort, high reward
Once set up, it runs automatically. You might not notice the 2%—but your future lifestyle could enjoy the potential benefits.
Adding just 2% of your salary to super may not feel like much today but it could be life-changing in retirement
How to get started
- Calculate how much you want to contribute. You can use a calculator, like the Money Smart Super Contributions Optimiser to help you.
- Speak to your payroll team to arrange pre-tax contributions.
- Review annually or after a payrise
Adding just 2% of your salary to super may not feel like much today but it could be life-changing in retirement. Not only are you saving more, but you’re doing it tax-effectively, potentially reducing what you pay the ATO and growing your future nest egg.
This could be one of the smartest, simplest financial moves you can make and your future self will be seriously grateful.
Things to keep in mind
- The concessional contributions cap is $30,000 a year (from 1 July 2025), including employer SG contributions and any salary sacrifice. Make sure you stay under this to avoid extra tax and check the ATO website.
- If you’re a low or middle-income earner, consider other government co-contribution options too.
- You can change or stop your salary sacrifice arrangement anytime (just speak to your payroll or HR).
Superannuation is a means of saving for retirement, which is, in part, compulsory. The Government has set caps on the amount of money that you can add to your superannuation each year and over your lifetime on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or registered tax agent or visit the ATO website.
This is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on it, consider its appropriateness to your circumstances and read the Financial Services Guide (FSG), Product Disclosure Statement (PDS), and Target Market Determination (TMD) available on our website for information on the benefits and risks of our Funds. You should consider seeking advice from an authorised financial adviser before making an investment decision.
