Case Study: CSS

After-tax contributions to Nadia’s super

Supplementary contributions are voluntary after-tax (non-concessional) contributions above the 5% basic contribution.

They can be paid by Nadia’s employer from her after-tax pay or directly by Nadia to CSC, and can be paid regularly or as one-off contributions.

For regular supplementary contributions, Nadia can choose to contribute a percentage of her super salary* or a set dollar amount.

To arrange supplementary contributions, Nadia can:

• talk to her employer to arrange regular contributions; and/or
• make one-off contributions directly to CSC at any time through BPAY.

If Nadia was not making the 5% basic contribution, all her supplementary contributions (regular and one-off) would have to be made directly to CSC through BPAY. Members who are contributing at a rate of 0% can change their contribution rate to 5% or more at any time while they are a contributing member. Contributions above 5% will be included in their supplementary contributions. See Contributing to CSS.

*Super salary is the full-time equivalent of a member’s annual rate of pay (gross amount), including any recognised allowances. It does not include overtime or accommodation and travel expenses. 

Although Nadia can determine how much she wants to add to her super, caps set by the ATO will apply.

Contribution caps and the tax implications for Nadia

Contribution caps are limits on concessional and non-concessional super contributions set by the ATO and reviewed each year. If a member exceeds either of the caps, the excess will be included in the member’s assessable income and taxed at their marginal rate with a 15% offset to account for the contributions tax already applied.

See the ATO information on Contributions caps for the 2026–27 financial year.

Concessional contributions cap

This is the maximum amount of before-tax contributions such as compulsory Superannuation Guarantee and salary sacrifice contribution amounts that can be contributed to a member’s super each financial year without contributions being subject to additional tax.

For the 2026–27 financial year, the concessional contributions cap is $32,500.

How does this affect Nadia?

As the SG contribution paid into Nadia’s super is below $32,500, and she does not intend to salary sacrifice at this stage, she will not incur any additional tax on before-tax contributions made to her super. If Nadia chooses to salary sacrifice in the future, her employer can contribute directly to Nadia’s super from her before-tax salary, either into another complying super fund of Nadia’s choice or through a CSC PSSap Super account.

Non-concessional contributions cap

This is the maximum amount of after-tax contributions that a member can contribute to their super each year without their contributions being subject to additional tax. For the 2026–27 financial year, the non-concessional contributions cap is $130,000.

How does this affect Nadia?

• Nadia’s annual basic contributions are non-concessional and need to be taken into account when deciding on her supplementary contribution amounts.
• Her $100,000 inheritance is an after-tax amount so it would be classified as a non-concessional contribution.

Before deciding on the dollar amount of her supplementary contributions, Nadia needs to check that the combination of the 2 amounts above does not exceed the $130,000 cap. If they do, Nadia could consider the ATO’s bring-forward arrangement. This allows her to contribute more than $130,000 without incurring additional tax, subject to specific requirements.

Adding more to super: utilising the ATO’s bring-forward arrangement

The ATO's bring-forward arrangement allows members under 75 years of age to bring forward non-concessional contribution cap amounts from future years to contribute in a single year, without incurring additional tax.

For the 2026–27 financial year, the bring-forward arrangement allows non-concessional contributions of up to $390,000, subject to the member’s total super balance as shown in the table below. Any part of the bring-forward amount not used in the first year can be used in the remaining 1 or 2 years.

Total super balances are calculated as the sum of:

• the Accumulation Phase Value (APV)* reported by each super fund of which the person is a member
• any transfer amounts in transit on 30 June; and
• any super income streams in the retirement phase.

Bring-forward arrangement eligibility

Eligibility for the bring-forward arrangement depends on the member being under 75 years of age, and their total super balance being equal to or less than $2.1 million.

How supplementary contributions will affect Nadia's retirement income

To help Nadia make an informed decision, her adviser walks her through how CSS pensions are calculated and how supplementary contributions can influence her final benefit.

What does this mean for Nadia?

As a 60-year-old CSS contributor, Nadia can retire under Age Retirement. However, if she’s offered redundancy, it can change how her benefit is calculated.

Age retirement:

If Nadia retires at age 60, her supplementary contributions will go towards funding an additional pension of up to 20% of her final salary. Any amount not required for this pension will be paid to her as a lump sum, which she can choose to take as cash or roll over to another fund.

Redundancy: 

If Nadia is offered redundancy and chooses to defer her benefit, any supplementary contributions she’s made will be included when calculating her additional non-indexed pension, when she later claims it as a Maximum pension, or as a Maximum pension with a lump sum or productivity component.
Any supplementary contributions she makes will increase the value of both her Non-indexed and Maximum additional non-indexed pension options.

Pension calculations

Any component not included in a pension calculation will be paid as a lump sum when Nadia reaches her preservation age or meets a condition of release and will be subject to cashing restrictions applicable at the time.

Age Retirement Calculation

As Nadia joined CSS at age 22 and has not taken any periods of leave without pay that don’t count as service, she has now completed 38 years of service. Her final salary is $120,000.

Referring to Table 4 in the CSS Benefit Tables, her adviser determines that Nadia’s standard CPI-indexed pension will be 46.8% of her final salary, which equates to $56,160 per annum.

Her adviser then refers to Table 1 to calculate the maximum additional non-indexed pension available to her. Based on her age, this is 20% of her final salary, or $24,000 per annum.

To confirm whether Nadia has enough funds within her benefit to support this additional pension, her adviser reviews the benefit components listed on the rundown provided by CSC.

Components:

Basic contributions including interest: $360,000

Supplementary contributions $0

Productivity contributions $140,000

To calculate the maximum additional pension available to Nadia, her adviser uses the following formula;

Permitted additional pension = $120,000 (Final Salary) x 20% (% of final salary based on age) = $24,000

Actual additional pension = 500,000 x 10% (age factor from table 1) = $50,000

Equity required to fund additional pension = $24,000 / 10% = $240,000.

Then, to calculate Nadia’s excess contributions her adviser deducts the equity required to fund the additional pension from her total equity of $500,000. This leaves Nadia with $260,000 which must be paid as a lump sum when she retires.

To summarise, she would have the following benefit options:

Option 1 - Maximum pension

Standard pension=$56,160

Additional pension = $24,000

Excess contributions lump sum = $260,000

Option 2 - Maximum pension, refund of productivity component

Standard pension=$56,160

Additional pension = $24,000

Excess contributions lump sum = $260,000

Option 3 – Standard pension, refund of member and productivity components:

Standard pension=$56,160

Lump sum=$500,000

If Nadia decides to contribute the additional $100,000 as a supplementary contribution, she now understands this amount will be added to her excess contributions lump sum when she claims her benefits as her additional pension cannot exceed 20% of her final salary (based on her age).

Nadia can also consider contributing her $100,000 to PSSap Ancillary or a fund of her choice and using the money to set up a Transition to Retirement account while she continues working and contributing to CSS.

Her adviser explains this would give Nadia access to additional income from her super while she continues working. More information about CSC’s Transition to Retirement product, CSCri is available here; CSC Retirement Income.

The calculation is shown below:

Basic contributions including interest $360,000

Supplementary contributions $100,000

Productivity contributions $140,000

To calculate the maximum additional pension available to Nadia, her adviser uses the following formula;

Permitted additional pension = $120,000 (Final Salary) x 20% (% of final salary based on age) = $24,000

Actual additional pension = $600,000 x 10% (age factor from table 1) = $60,000

Equity required to fund additional pension = $24,000 / 10% = $240,000.

Excess contributions = $600,000-$240,000=$360,000

To summarize, Nadia would have the following benefit options:

Option 1 - Maximum pension

Standard pension=$56,160

Additional pension = $24,000

Excess contributions lump sum = $360,000

Option 2 - Maximum pension, refund of productivity component

Standard pension=$56,160

Additional pension = $24,000

Excess contributions lump sum = $360,000

Option 3 – Standard pension, refund of member and productivity components:

Standard pension=$56,160

Lump sum=$600,000

*Please contact CSC to run a benefit estimate for your client’s specific circumstances. These calculations are for illustrative purposes only.*

Involuntary retirement/ redundancy; deferred benefit calculation 

If Nadia is offered redundancy or is involuntarily retired, she can either claim her benefit using the age-retirement calculation above or choose to defer her benefit. If she decides to defer, the following formula will be used to calculate her pension and lump sum options:

Components:

Basic contributions including interest: $360,000

Supplementary contributions $0

Productivity contributions $140,000

CPI-indexed pension calculation

$360,000 (Basic Contributions + interest) x 2.5 = $900,000

$900,000 x 10% (Age factor from table 1) = $90,000 standard pension 

Non-indexed pension calculation 

$500,000 x 10% (Age Factor from table 1) = $50,000 maximum additional pension.

Her available benefit options would be as follows:

Option 1 - Maximum pension

Standard pension=$90,000

Additional pension=$50,000

Option 2 - Maximum pension, refund of productivity component

Standard pension=$90,000

Additional pension=$36,000 ($360,000*10%)

Lump sum of productivity=$140,000

Option 3 - Standard pension, refund of member and productivity components

Standard pension=$90,000

Lump sum of member and productivity=$500,000

When Nadia is formally advised that her role will be made redundant, she decides to contribute* an additional $100,000 to her CSS benefit to increase her non-indexed pension.

* Payment must be received before the final fortnightly employer contribution is made. Because Nadia could resign at any point in the pay cycle, it’s safest to allow at least two weeks plus five days for BPAY to clear, even if payment is made on a weekend. Planning the payment around three weeks before her cease date is a reliable buffer.

Her additional pension will now be calculated as;

$500,000 basic contributions, interest and productivity + $100,000 supplementary contribution = $600,000

$600,000 x 10% (Age Factor from table 1) = $60,000 maximum additional pension.

Please note the supplementary contributions do not impact the calculation of the standard pension which remains the same.

Her available benefit options would now be as follows:

Option 1 - Maximum pension

Standard pension=$90,000

Additional pension=$60,000

Option 2 - Maximum pension, refund of productivity component

Standard pension=$90,000

Additional pension=$46,000 ($460,000*10%)

Lump sum of productivity=$140,000

Option 3 - Standard pension, refund of member and productivity components

Standard pension=$90,000

Lump sum of member and productivity=$600,000

*Please contact CSC to run a benefit estimate for your client’s specific circumstances. These calculations are for illustrative purposes only.*