Should I fill my super as quick as possible

[kiwiozearlyretirement]

So we have been maxing out our non concessional super contributions since before 2017 when the rules changed. One year I contribute 300000, the next my partner contributes 300000 and the following year we cannot contribute so have either bought shares outside of super or let it accumulate in the bank. This was less of a concern when the interest earned in the bank exceeded inflation but it is so pitiful now. I can’t find any accounts more than 1 % and even these you have to jump through hoops.
One of us is post preservation age so could essentially convert super to pension phase anytime. But they are not at the 1.7 million amount yet.
I have realised recently that you cannot just keep contributing non concessionally to the accumulation fund once your total super reaches 1.7. If you are still working you can still contribute concessionally your 27000 a year but my partner is a SAHD so does not earn a salary but still contributes interest and dividends from investments outside of super.
Once you have got money into super accumulation or pension phase you never have to take it out. For example if you have 1.7 million and it grows to 2 million you don’t have to remove 300000. If your 1.7 million is in pension phase the same applies. But if your 1.7 in pension phase drops to 1.2 due to a prolonged bear market you cannot top it up either. If you transferred 1.7 that is your account transfer balance and you can never contribute more to pension phase again. But if it’s still in accumulation phase and drops to 1.2 you can top it up.
However if you delay contributions and your fund naturally creeps up over the next few years to 1.7 then you can no longer contribute any non concessional funds. But your ultimate amount will be lower because you have not got as many base units in there. I’m sure I’m not explaining myself clearly so I will try with an example.
Say you have 1 million dollars consisting of 10000 units of VAS that you paid $100 for. If you could contribute no more to that super you would benefit from about 4% in dividends plus the capital growth per year compounding. Or instead you contribute slower to get to your 1 million and some of those VAS units cost you more and you only end up with 9000 units to reach 1 million worth. Obviously you will get lower return as the dividends are still the same whether you paid $100 per unit or $110. That super is locked in forever so the difference with the beneficial tax treatment compounds.
To take this idea further I always thought as soon as 1.7 was reached we would convert this to pension but if you delayed until the value reached 2 million which might only be another few years you would then have 1.7 in pension phase paying zero % tax and 300000 in accumulation paying 15% tax. Of course once you are retired you can earn a fair amount paying zero tax anyway so maybe if it’s outside super it’s not such a big deal.
What do people think? Am I missing something here?
Ultimately the decision is we can contribute 330000 to super in June next year but should we save this money up in the bank waiting to Stuff it in as soon as we can? Or do we just keep investing outside of super and then contribute gradually over the next 2 years after July. The loss of return calculation is about $10000 over the 40 weeks till July but if you don’t get that money in when the units are cheaper that compounded benefit is lost to you forever.
I wish I was better with spreadsheets and I could run a comparison analysis. But all the variables are doing my head in.

[mjr]

Analysing your fund's performance by the number of "base units" isn't helpful.  The return is on the balance you have invested, not the number of units.

You also seem to be focussing mostly on dividends (which is no doubt driving your focus on number of units), while giving only a passing nod to capital growth.  All that matters is total return, especially when the bulk of your funds will be tax free in pension mode.  Before then, capital gains will be taxed more favourably than super and will be contributing more to the performance than dividends anyway.

I can't really follow your reasoning after that.  You have only 2 things to consider.  Do you put your cash into shares as opposed to leaving it in the bank and (independently) do you use super as the vehicle or not ?

If you don't need the money in the short to medium term as seems to be the case, I'd say that the answer is put the money into shares in super.  If it's in super, you can always get it out again and if pension ages are close/passed then waiting time is not a factor.  But once caps are passed then you can't get non-concessional chunks in there and the option goes away.

Also note that until your taxable investment income per annum exceeds about $53k per person, then there's no tax savings by having money over the transfer balance cap in accumulation mode in super.  There's no tax-free threshold for income paid in accumulation funds.

[kiwiozearlyretirement]

Thanks for the reply mjr. You are correct I do tend to be focussed overly on dividends hoping that once pension phase is activated if less shares are needing to be sold to meet the minimum withdrawal levels then selling at a loss will be less impactful when the market inevitably drops. I agree that overall increase in capital is your return but surely if you bought units for cheaper 1 year earlier your overall return is magnified than if you bought ‘expensive’ units.
Sorry for not being clear.
We definitely want to put as much as in super as possible but are torn between letting it build up in the bank until we are eligible to put more in in 8 months. Or just invest it in shares outside super and take the capital gains hit to shift it into super when we are eligible. Or just accept we delay contributing to super until we are eligible and drip feed as previous.
I must admit I had a different figure for the break even point on outside super income and it was much lower. I will have to look at the maths again

[deborah]

You get a capital gains hit whether it’s in a bank or shares - it’s just that bank gains are so small, and you can’t actually lose money. Can you do an in specie transfer of the shares (ie. if you have a small apra fund or an smsf)?

You can add money to super when you’re in pension phase - you just end up with two accounts, one in pension phase and the other in accumulation, and then transfer the accumulation one over to pension.