If you think superannuation is only for old folks, you need to think again. It’s true that you won’t be spending your super until you retire, but your understanding of how it all works needs to start NOW so that you don’t miss out later on.
Why? Because for Australians, super is our most tax-effective savings plan, so knowing how it works helps set you up financially for the future. To make sure you understand the basics, check out our 5 easy super FAQs and get in touch if you have any more questions.
Super is money set aside over your working lifetime to provide for your retirement.
The thing about super is that the interest (or ‘investment return’) earned on your super money is automatically reinvested into your fund. When you then earn interest on your interest, the result is called ‘compounding’ and this can lead to faster growth.
Your super fund invests the money in your super account in things like shares, property and managed funds.
Some super funds offer different types of insurance, such as income protection, total and permanent disability insurance and life insurance.
For most people, it starts when you’re 18 or more and getting paid at least $450 (before tax) in a month.
Your employer is required by law to pay, in addition to your wages, an amount into a super fund for you.
These payments are known as ‘super guarantee’ or ‘concessional (pre-tax) contributions’.
You can also make your own contributions to super to help grow your balance. There are limits to the amounts you can contribute, so you should ask a financial adviser for help on this.
The amount of super your employer pays is called the ‘super guarantee’ (SG) and is currently 9.5% of your ordinary time earnings. For example, if you earn $33,800 (before tax) your employer will pay $3,211 in SG contributions each year
Your employer must pay the SG into your super fund at least four times a year by set dates.
To check your SG payments, contact your super fund and ask for a list of payments and dates.
Your super fund should also automatically send you an annual statement soon after the end of each financial year (30 June).
If you create a MyGov account and link it to the Australian Tax Office (ATO), you can access details of your super account(s) yourself.
Yes. Your employer might choose a super fund for you (called a ‘default fund’) if you don’t have one, but you are free to pick your own.
There are five basic types of super fund and funds can differ from each other in investment options, investment performance, fees and charges and whether personal insurance is included.
There is advice on how to choose a super fund that suits you on the MoneySmart website.
It’s important to realise that different funds may suit different people and you should choose a super fund that is appropriate for you personally. You can do your own research at the sites listed below, although we recommend you talk to a financial adviser as this is an important decision for your financial future.
Top Performing Super Funds (Canstar)
Best Performing Super Funds (SuperGuide)
Top 10 Performing Super Funds (RateCity)
You could have more than one super account if you’ve had more than one employer.
To avoid paying fees on more than one account, you could ‘roll over’ all your super into the fund you prefer. Your super is likely to grow more quickly if all your money is in one fund because of compound interest. Ask your super fund or talk to a financial adviser about how to arrange a rollover.
It’s also possible for super to get ‘lost’, especially if you have multiple accounts. If you think you could have ‘lost’ super, the ATO can help you find it and you can then arrange to roll it over into the fund you prefer.
If you would like to know more about super or how to make the most of your super savings, please contact me today on 07 5479 5499 or info@vbatax.com
And because it’s tax time, you can enjoy a 25% discount* on this year’s tax return preparation if you come to see us with all the required information. (*This offer applies to Community Services apprentices and apprentices of Community Services host employers.)
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Victor Bimrose Accountancy Pty Ltd (ASIC No. 1259423) ABN 53 010 957 294 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361.
Mark Foxley-Conolly (ASIC No. 1259421) is a Limited Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361
General Advice Warning: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.
