Superannuation
It pays to understand how superannuation works whether you are in your first job or nearly ready to retire. Superannuation is your investment in your future.
What is superannuation?
Superannuation provides money for your retirement.Most people's superannuation starts to accumulate because their employer pays contributions.What you do with your super will determine how much you have in retirement, and thus what type of lifestyle you can have in retirement.
Types of superannuation
Accumulation Funds: Most superannuation funds are based on the accumulation method. What you accumulate over your working life plus investment less expenses is what you have left.
Defined Benefit Funds: This method is generally available to the public sector, however it is used by some large companies. The value of the retirement benefit is defined by a set formula which may take into account your length of service and age at retirement.
Employer contributions
It is compulsory for most employees to be paid Superannuation Guarantee by your employer. Currently this rate is 9%.
You can also salary sacrifice additional contributions from your pre tax salary.
Personal contributions
You can also make personal contributions from your after tax income.If you do so, you may be eligible for the Government Co-contribution.If you are self employed, you may be entitled to a tax deduction for your contributions.
It is also possible to contribute to your spouse/partner superannuation and you may be able to claim a tax offset.
When can you get your superannuation?
Until recently, you could only access your super once you turned 65 or retired. Under the transition to retirement rules you can receive your super once you reach the "preservation age"
|
Date of birth |
Preservation age |
|
Before 1 July 1960 |
55 |
|
1 July 1960 - 30 June 1961 |
56 |
|
1 July 1961 - 30 June 1962 |
57 |
|
1 July 1962 - 30 June 1963 |
58 |
|
1 July 1963 - 30 June 1964 |
59 |
|
After 30 June 1964 |
60 |
There are some circumstances such as permanent incapacity, severe financial hardship or compassionate grounds which enable you to receive your superannuation funds earlier.
Can you get your superannuation and continue to work?
You do no have to retire permanently to receive your super after reaching preservation age. This means you can reduce your hours and use your super to supplement your income.
In addition, if you are over 55, and still working full time, a transition to retirement pension strategy can actually boost your super balance significantly and save you thousands in tax.
Call us now to discuss your superannuation requirements. We have a number of financial advisers we work closely with who are happy to discuss with you how you could save. Initial consultations are free so why not get the right advice now!