The impact of taking career break leave on super in Australia

by 11 Jan 2022Superannuation

There are several reasons why you’d take a career break. Family reasons, study or a long travel trip are common reasons.

It’s usually women who take a break to raise a family. According to a 2019 study, only 29% of working males in Australia and New Zealand say they’ve taken a career break.

The financial impact of taking career break leave in Australia is one you should plan for. And that includes minimising the impact of such a break on your superannuation.

So let’s take a look at the cost of taking a career break. And then we’ll discuss some tips to help you plan for it.

Is there a cost of taking a career break?

In short, yes.

As at 1 July 2021, the superannuation guarantee (SG) rose to 10% and will continue to rise over the next few years. So if you’re earning $90,000 per year, then your SG is currently $9,000. Your employer pays this.

But it’s not only the SG that you’re missing out on when taking a career break. It’s also any gains that SG could make for you after it’s paid into your super fund.

Top tips for your super during a career break

We recommend you start planning your career break well in advance of taking it. Planning doesn’t sound fun, but it’s necessary. And it’s something that you’ll be thankful for later on.

So here’s some tips to think about when planning your career break.

Boost your super before taking your career break

There are a few ways you can contribute to your super on top of your employer’s SG.

Why do this? It helps minimise the impact of taking a career break on your retirement. Remember that you won’t be receiving SG payments from your employer whilst on a career break.

There are three ways of making contributions to your super:

  • Concessional contributions. There are two types of concessional contributions: salary sacrifice and personal deductible contributions. Salary sacrifice contributions are pre-tax contributions taken from your salary. Personal deductible contributions are contributions using your after-tax dollars. There are limits on the concessional contributions you can make each financial year.
  • Spouse contributions. Your spouse may opt to help your super grow if you’re taking a career break. Or vice versa! A spouse may be able to claim a tax offset for making spousal super contributions. A spouse can include a married or de facto partner.
  • Contribution splitting. Have you recently contributed to your own super? If so, you may transfer some of this to your spouse’s super fund. You may only do this once per financial year.

There’s also the government co-contribution scheme. This is to help boost super funds of low and middle-income earners. You can learn more about co-contribution on the Australian Tax Office’s (ATO) website.

Combine your super

This is something you can do before or during your career break. If you’ve got more than one super fund account, combine them.

This makes it easier for you to manage your super. But it also saves you money on fees and avoid duplicate insurance policies.

Find any lost super

Did you know that you can do a simple search to track down any money that belongs to you? This includes being able to find any lost super.

You can find lost super by logging into your myGov account and using the ATO online services. Some super funds offer to help you track down any lost super. That requires giving your super fund consent to your Tax File Number to conduct such a search.

Chat to a financial adviser

Chatting to a financial adviser can help you plan your career break. The chat can cover:

  • planning your cash flow
  • paying off debt
  • creating a savings plan
  • how to grow your wealth

Top tips for your super during a career break

Planning a career break can be both exciting and daunting at the same time. But it should be more about the excitement!

And to get the most out of the excitement, it’s best to have a plan. This minimises the impact on your super, and also allows you to make the most of your career break.


Important information: The information provided on this webpage is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs.

Need help planning your career break leave?

Feel free to book in an obligation-free 15-minute chat and let us help you.

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