Rice Warner says some employers choose to provide insurance benefits via a super fund for ease of administration, and because the premiums are treated as employer superannuation contributions, they count towards an employee’s concessional contribution cap of $25,000 per annum.
“For many employees, insurance premiums will be low and the individual will not be aiming to maximise their concessional contributions,” Rice Warner said on its Insights blog.
“However, for those who are nearing retirement age and aiming to salary sacrifice additional superannuation contributions it can be a very different situation.”
On 1 July, the maximum concessional contribution cap will be reduced to $25,000 per annum.
Currently, employers can make annual deductible contributions of up to $35,000 for employees aged 49 or more on 30 June of the previous financial year and $30,000 for younger employees.
Rice Warner said the reduction would impact older employees who have the capacity to save more and who wish to salary sacrifice more contributions into superannuation.
“Salary sacrifice contributions are treated as employer contributions and are taken from an employee’s pre-tax salary,” Rice Warner said.
“Employees who currently salary sacrifice to the extent that total concessional contributions exceed $25,000 will either need to reduce their superannuation contributions or make after-tax contributions.”
This ain’t no revelation you know.
People don’t have to have a mental illness to drop dead for their beneficiary pension to breach the cap too.