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Worried about shrinking super? The tax man can ease the strain, writes David Potts.
The unlikely hero for those close to retirement whose super has shrunk is an old foe: the tax office.
It won't bring the market back to life or solve all your financial problems but, surprisingly, it can ease the pain.
"Even if you can't do anything else at least pay less tax," First State Super Financial Planning's Geoff Lawley says.
For starters salary sacrificing into super is not only the pre-eminent way of saving for retirement, it's better than ever.
True, if you'd been salary sacrificing over the past six or 12 months you'd have less super than you started with since the market has been going backwards faster than your contributions can keep up.
Pumping money into an aggressive share fund at the top of the market might have been a mistake but just as bad would be shunning it at the bottom.
Salary sacrificing stretches further in a bear market because you can afford more units in your super fund than before.
"In a sense, regular contributions are just like dollar cost averaging into the sharemarket," says executive director of Macquarie Adviser Services David Shirlow.
Remember not only is your marginal tax rate cut to 15 per cent on super contributions but if it also pulls you down the scale you'll pay less tax on everything else as well.
Admittedly while the market is weak this isn't going to make much difference to your super short term. If you were about to retire, you can't.
But there's a compromise offered by the tax system. Why not cut back your hours, which will also give you a taste of what retirement will be like?
Under the transition to retirement rules, known by various acronyms such as TRIP, TRAP and TRIS, you can draw down some of your super while still working.
It pays for itself because while there's some leakage from your super, you're still earning an income and contributing some of it back through your boss's 9 per cent contribution.
But it can be made much better by combining salary sacrificing with it.
Yep, put money in with one hand that you're taking out with the other.
A pinball-like succession of tax breaks TRIP, TRAP and TRIS their way into your super, especially if you've turned 60. On top of the stand-alone tax breaks of salary sacrificing the new ones are zero tax on your super fund (because it's moved to pension phase) and a 15 per cent rebate on the pension; or if you're 60 no tax at all.