Six super steps to lower the cost of caring

With around 3 million Australians* providing unpaid care to a loved one, there are definitely ‘Millions of reasons to care’ – which is the theme of National Carers’ Week, from 13-19 October 2024.  

But many carers – and parents, as well – take time out from work to provide that care, which can have a big effect on your super.  

Due to the compounding effect of money in your super account over the long term, even small changes can help offset the cost to your long-term financial situation.  

Here are some tips to help you take care of your super now, so it takes care of you later. 

Caring for a loved one can be financially challenging, but there are various payments and work options available that can help ease the burden.  

Look into government payments such as the Carer Payment, Carer Allowance, and Carer Supplement, which provide financial support to those who care for someone with a disability or illness, or an elderly person.  

• The Carer Payment is available if you provide constant care for someone with a disability or medical condition who meets certain criteria. The amount you get depends on: 

- your personal circumstances, such as whether you are single or partnered, and 

- your (and the person you care for) level of assessable income and assets. The Carer Payment is taxable if you or the person you care for are Age Pension age. 

• The Carer Allowance can be paid if you provide daily care and attention for someone in their home or your home, who has a disability or medical condition that meets certain criteria. Carer Allowance is a supplementary payment of $153.50 per fortnight. It can be claimed in addition to other income support. There’s no asset test but there is an income test: you and your partner’s combined adjusted taxable income must be less than $250,000 per financial year.
  If you care for someone aged under 16, a Health Care Card can also help with the cost of their medicine and health care.  
• The Carer Supplement is a tax-free annual payment of $600 that you are automatically paid if you receive Carer Payment and/or Carer Allowance for an eligible period that includes 1 July that year.  If you receive both the Carer Payment and Carer Allowance, you can receive the Carer Supplement for each payment, totaling $1,200 per annum. 

Applying for carers’ payments in a timely fashion will help boost your finances. 

Flexible or part-time work arrangements that can accommodate your caregiving responsibilities while still allowing you to earn an income are also worth considering, if possible. 

If you’re able to balance paid work with your carer’s responsibilities, you will continue to be paid your compulsory super contributions. 

The Super Guarantee is equivalent to 11.5% of your usual (ordinary time) earnings from your wages or salary, and increases to 12% on 1 July 2025. 

Consider making additional super contributions to offset the loss of regular Super Guarantee payments due to reduced work hours. 

If your income is less than $45,400 before tax and you meet certain eligibility criteria, the government will contribute 50 cents for every dollar you contribute to your super from your after-tax income up to the maximum government co-contribution amount of $500 a year. 

This amount reduces until your income reaches the highest income threshold of $60,400 for 2024-25, at which point you are no longer eligible to receive the super co-contribution.  

Consider any other ways you can contribute to your super, such as salary sacrifice, which may reduce your pre-tax income and therefore the tax you pay.  

This can enhance your super balance over time, reducing the financial impact of caregiving on your retirement savings.  

Always consider your personal financial circumstances and tax implications and seek financial advice if required.  

You may be able to make a contribution to your spouse’s super, or to receive a contribution to your super from them. This can help build your super balance, or that of your spouse, if one of you isn’t working due to your caregiver arrangements, or if one person earns more than the other.  

• Spouse contribution: You can make a super contribution directly to your spouse's super, which is treated as their after-tax contribution. This may entitle you to a tax offset of up to $540 per year. To be eligible for a tax offset, their income must be less than $40,000 a year. To be eligible to make a spouse contribution, there are certain conditions both spouses need to meet. 
• Spouse contribution splitting: You may be able to split contributions you have already made to your own super, by rolling them over to your spouse's super.
  You can generally apply to your fund to split your employer contributions and personal before-tax contributions made during the previous income year. There are restrictions on the type and amount of contributions you can split and both spouses need to meet certain conditions to be eligible. 

Parents and carers who access government-funded Parental Leave Pay to help them care for children born on or after 1 July 2025 will receive super contributions on their payments. 

The Federal Government's amendment to Paid Parental Leave legislation passed both houses of Parliament last month and will see the 12% Super Guarantee payment applied from 1 July next year.  

Initially it will be paid on 24 weeks of paid parental leave from 1 July 2025, increasing to 26 weeks from 1 July 2026. 

The payment, while available to men and women, recognises that when women take time away from work to raise children, it contributes to the super gap that sees women retire with 25% less super on average than men. 

"Paying super on Government parental leave is an important investment to help close the super gap and make decisions about balancing care and work easier for women,” the Minister for Women, Katy Gallagher, said^.

If you’ve changed jobs several times, resulting in multiple super accounts, consolidating them can help you save on fees and insurance premiums – which may be particularly important if your income is reduced while you’re caring for a loved one. 

If you’re not sure how many super accounts you have, you can log in to FirstNet and ask CFS to perform a search for any lost super on your behalf or visit the MyGov website.  

Paying less in fees and insurance premiums, combined with the power of compounding returns, means your retirement savings are more likely to grow more quickly. 

Before consolidating your super, check the insurance cover on all your accounts to make sure the one you’re planning to keep offers enough cover for your needs. 

If you’ve changed your employment, reduced your working hours or changed your occupation group since taking on carer responsibilities, it’s worth reviewing your employment details and insurance in your super. 

Your occupation group may affect how much you’re charged for insurance in your super, so reviewing this could see your insurance premium reduced.  

It’s also worth reviewing your insurance to check your type of cover, level of cover and insurance premium are suitable.  

You can do this by logging in to FirstNet or our mobile app. 

If you would like more help managing your super, schedule a call with our guidance team or consider talking to a financial adviser.