Super effective way to reduce your tax rate
Super is usually the most tax effective way to invest your retirement savings. That's because super is taxed at a much lower rate than other types of investments, to encourage you to save more for your retirement.
| Tax | Tax rate | How it applies |
| Contributions tax | 15% | Paid on all employer contributions (including salary sacrifice) and on personal contributions you claim a tax deduction for. |
| Tax on investment earnings | Up to 15% | Although the maximum rate is 15%, the actual amount paid is generally lower because LGsuper can use imputation credits from share dividends to reduce tax. There is no tax on investment earnings on pension accounts. |
| Tax on lump sum benefit payments | Varies | There are two tax components - a tax free component that is generally your after-tax contributions, and a taxable component. The amount of tax you pay on the taxable component depends on your age. Under age 55 Taxed at 20% plus the Medicare Levy Aged 55 to 59 First $165,000* tax free then taxed at 15% plus the Medicare Levy Age 60 plus Full benefit is tax free *2011/12 threshold |
| Tax on pension payments | Varies | Aged 55 to 59 Taxed in the same way as income tax on salary, with some concessions. Part will be tax-free if you start your pension with any tax free component. You also receive a tax offset of 15% of your pension payment. Aged 60 plus Full pension is tax free |
Note: the tax information does not include The Temporary Flood and Cyclone Reconstruction Levy (flood levy).
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