header-photo

Superannuation

Wether you are in your first job after leaving school or only a few years from retirement, it pays to understand how superannuation works.

By the time you are ready to retire, your superannuation could have grown to be one of your largest assets you will have in your life. This is your investment in the future. It is important to understand why you need it, what you are entitled to, how you can contribute and how you can best mange the money for your retirement. Take control of your superannuation and find out what choices you have while you are working and when you retire.

What is Superannuation ?
Superannuation is an investment designed to provide money for your retirement. Most people start superannuation when they start work because their employer has to pay contributions. You can choose to top up the funds out of your own pocket. If you are self-employed you can choose whether or not to have superannuation.You can also choose to make personal contributions to your superannuation from your net income after tax. If you do, you may be eligible for the Government Co-contribution which the Australian Taxation Office calculates and pays, based on your tax return and information received from your superannuation fund.
Your superannuation can grow to be a significant asset over your working life. You benefit from saving regularly over many years, your superannuation fund makes the savings work for you by investing them, and your money is generally taxed more lightly than other forms of investment. Your superannuation fund may also offer life insurance cover and disability insurance.

What are Employer Contributions ?
Your employer will pay superannuation contributions on your behalf unless you are exempt or you are self-employed. This contribution is called the Superannuation Guarantee. It is compulsory for most employees.You can find out more about the Superannuation Guarantee from the Australian Taxation Office.
You can also add your own money to your employer's contributions. You may be able to do this through what is called salary sacrificing. This means that you choose to take less salary and have your employer contribute the amount you don't take added to your superannuation. As the salary you sacrifice comes off your gross salary, before you pay tax, you may be able to save tax this way. This tax saving comes about because, for most people, the tax saved on the forgone salary exceeds the tax that is paid when the equivalent amount is contributed to your superannuation.

What are personal contributions ?
If you are self-employed, you can have superannuation and you may be entitled to a tax deduction for your contributions.It is also possible to contribute to your spouse or partners superannuation and you may be able to claim a tax offset if they earn nothing or have a low income.There is a lot to think about if you are considering making personal contributions to your own or your spouse or partner's superannuation. It pays to find out as much as you can about the tax implications. You may even want to ask a financial expert for advice.The law does allow people to get their superannuation earlier in some circumstances. These include cases where a person suffers permanent incapacity for work, in some cases of severe financial hardship, or on 'compassionate grounds'. You can find out more from your superannuation fund.

What will i get when i retire ?
If you are in an accumulation fund, your final superannuation balance will depend on how much you and your employers have contributed, whether or not contributions stopped at any time when you were between jobs, and the returns your fund earned on investments and the tax paid.When you retire, you can choose how you take your benefit. Most superannuation funds will offer you a lump sum, a pension, or a mixture of both. It pays to find out as much as you can about tax and government benefits before you make a final decision.

Keeping a track record of your superannuation

Even if retirement is some years away, it pays to know as much as you can about your superannuation.

  • Ask your employer for details of the superannuation fund you belong to
  • Your fund should send you annual statements that show you how much is being contributed on your behalf, how you money is being invested and how it performed during the year
  • Make sure you fund has your contact details - they can't send you a statement if you move without telling them
  • Read your statement. If you don't understand call them and ask questions

If you have had several previous jobs, you may belong to a number of funds. If you haven't kept old statements and can't remember where all your superannuation is, the Australian Taxation Office can help you find it.It's worth trying to work out what your final benefit will be. If your statement doesn't tell you, you may be able to ask your fund. There are also calculators available on the internet to help you.
It pays to think about whether you will have enough superannuation to live on when you retire. If you are concerned about how much you will have, you may need to think about making extra contributions. It may pay to talk to a financial expert about your situation and likely future needs.

Super Choices

While most people start out in the superannuation fund offered by their employer, you generally have the right to choose to switch to another fund.

You don't have to change funds if you don’t want to but you do have the right to shop around. You will find that funds differ in important features that are described in the Product Disclosure Statements. The key things to look for are:

  • Fees and charges
  • Death and Disability benefits and insurance premiums
  • Investments strategies
  • performance fund features and benefits

The Australian Securities and Investments Commission has information about comparing superannuation funds, including calculators that show the impact of fees and charges on your final payout.

If you have moved jobs, you may belong to more than one superannuation fund. It generally saves time and money to keep your superannuation in as few accounts as possible. You may think about moving your funds when you change jobs if your current fund is not available with your new employer. However, you could be charged fees if you move accounts, such as termination fees from the old fund and contribution fees for the new one, so make sure that you do your homework.

Some people consider moving their superannuation investments if their fund declares a negative return, or they may be interested in a fund that has had a strong earnings result. Take care when making decisions, and consider the performance of funds over five years or more. There is no guarantee that a fund that performs well in one year will perform well the next year.Almost everyone can benefit from saving today for tomorrow, by topping up their work-related superannuation.Although employers and employees both contribute heavily to superannuation, it is a fact that most people will still retire with less than they require to fully enjoy their retirement.If you are an employer we can set up and help you maintain your fund so that your Superannuation Guarantee obligations are met on time and help with the transition in employee movements.We handle all the paperwork when transitioning from another fund so that the transition is smooth and hassle free. We will meet with your employees and structure an investment portfolio to suit their individual needs and review their Superannuation account on an annual basis.

Whether you are an Employer, Self Employed or an Employee we can advise you on a Superannuation plan. If you would like superannuation planning advice, please contact us.