Superannuation is an investment strategy for your retirement that you build up during your working life, which for many Australians will also become their second biggest asset behind that of the family home.
The benefits of super
Guaranteed contributions: If you are working, your employer is generally required to contribute nearly ten per cent (9.5% in 2014/15) of your salary to your super fund on your behalf (this is known as the superannuation guarantee or SG).
Investment options: Your super fund pools your super money with other members’ funds and invests the money in assets, such as property, shares, fixed interest and cash investments. By carefully choosing the best assets, your fund makes sure that the money you contribute is looked after and grows. The aim is to build up as much money as possible for your retirement, to ensure a comfortable lifestyle.
Concessional Tax: Your super fund is invested in a concessionally taxed environment meaning that it is likely to grow at a faster rate – due to the lower impact of tax – than if you were to hold the same investments in your own name.
Timeframe: Superannuation is generally a long-term investment. This means that your money has a long time to benefit from the growth of your investments.
Things to consider
Fees: To pay for the cost of looking after your super, fees are deducted from your account. Also, as super is an investment, the Government charges tax (on earnings and income) albeit at a concessional rate.
Insurance premiums: Sometimes your super fund offers insurance to cover you for death, total and permanent disablement and income protection. If you elect to have insurance cover within your super fund, then the premiums for that insurance are deducted from your account.
Preservation age: The Government has placed restrictions on when you can access your super benefits, to ensure that super is used in retirement and not beforehand. Your preservation age is the Government specified age at which you can gain access to your superannuation benefits, provided you have permanently retired from the workforce. Your preservation age is determined by the year you were born – age 55 for those born before July 1960 rising to age 60 for those born after June 1964.
Access to your benefits
All contributions paid into a superannuation fund are preserved until you have met a condition of release such as reaching your preservation age and being retired from the workforce. In other limited circumstances you may be able to access your superannuation benefit, for example under financial hardship, if you become totally and permanently disabled or under the transition to retirement (TtR) rules.
Once you retire, your fund may give you the option to take your superannuation benefit as either a lump sum or as an income stream. An example of an income stream product is an account-based pension.
Have you lost some of your super?
The Lost Members Register is a central register of lost superannuation fund members and retirement savings account (RSA) holders. There are a number of ways you can check if you have any lost superannuation, the easiest of which is to conduct your own online SuperSeeker search via the Australian Tax Office’s website www.ato.gov.au/superseeker
What are you waiting for?
The team at Adviser fp can help you and your family to understand more about Superannuation and to track down any lost super that you may have. To discover how we can help you with regards the Superannuation options you have available, specific to your needs, give us a call today on 02 9633 3300 or click (here) for more information.
Source: Lonsdale Financial Group Ltd I ABN 76 006 637 225 I AFSL 246934 (Sep 2014) Part of the IOOF Group
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial planner and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.