Paying off your mortgage early before maximising your Gold State or West State benefit could be a mistake.

Paying down your mortgage to reduce interest payments can be a sound financial strategy. However, by making additional pre-tax contributions into your super fund, you may save more in tax than you can expect to save in interest. When the time comes to access your super, depending on your circumstances, you could use some of your benefit to pay off your mortgage.

For GSS members, the maximum average cap of 5% over the period of your membership applies to your member contributions to your fund. If your average is below 5%, you can increase your contributions to 6% or 7% to maximise your benefit, and if you make your contributions pre-tax you may benefit from additional tax savings.

As a WSS member, there is effectively no annual limit on your pre-tax contributions, if WSS is the only fund to which you make pre-tax contributions — rather, there is a generous lifetime cap of $1.445 million (for 2017/18) to which you can accrue your benefit tax effectively— so you could follow this strategy and/or take a different approach with a Transition to Retirement (TTR) strategy. Providing you’ve reached your preservation age, this arrangement allows you to increase your contributions by drawing an income from your super. This may provide you with tax savings and boost your super overall, plus it may give you the opportunity to get ahead on your mortgage payments.

To make the most of your GESB scheme, register for a free seminar today.

This information is general and does not take into account your personal objectives, financial situation or needs. Before making any decisions based on this information you should consider its appropriateness to you. We strongly recommend that you consult a financial planner before taking action based on this information. Further information and disclosures can be found in our Financial Services Guide.