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Why is super important? The answer is easy – superannuation is how we save for our retirement. It means (depending on your age and when you started work) from the day you start work until the day you retire; your employer will pay a portion of your salary (10 per cent from 1 July 2021) to your super. You’ll be able to access this money once you meet the conditions of release.

What happens to my money?

Your super money is invested on your behalf by your superannuation fund. In most cases, you can either choose your superannuation fund or enrol in the fund your employer offers to staff. From 1 November 2021 if you do join a new employer and not make a choice of fund, your employer may use a pre-existing superannuation account, on instruction from the ATO.

There are many benefits of superannuation in Australia, including that any contributions paid into your account are generally taxed at 15 per cent. This means you can potentially reduce the amount of tax you pay by contributing to your account (within the contribution cap limits). It’s important to remember that once the contribution is paid into your account, you can’t access it until you meet a condition of release.

Here are some examples of a condition of release, and when you can access your super:

  • You’re 65 years of age.
  • You’re over the age of 60 and no longer working.
  • You’ve reached preservation age and have retired.

Why should I consider investing in my super?

Here’s why you might consider adding to your super:

  • You would like to ensure you have enough money in retirement to maintain your lifestyle. 
  • You’d like to reduce how much tax you pay by using salary sacrifice contributions.
  • You’d like to take advantage of incentives like the Government co-contribution scheme.
  • You won’t need to access the money that you invest until retirement.

How much can I contribute to my super?

The Government has put limits in place to ensure that everyone has a fair opportunity to contribute to their superannuation. You can find the current limits via the Australian Taxation Office.

Are there different kinds of superannuation funds?

There sure are! Here’s an overview of each type of fund:

 

Retail funds

A retail fund is often run by financial institutions. They can offer a different range of investment options and may include lifecycle options.

You also have the option to use the predetermined options offered by many funds, where they choose an investment strategy on your behalf. 

Industry funds

These providers tend to offer accounts associated with specific industries – but, in most cases, they’re open to public offer (meaning anyone can join the fund). 

Compared with retail funds, some industry funds may offer limited investment options

Corporate funds

These funds are generally linked directly to a particular company, making it easier for the employer to manage accounts for their employees. A corporate fund also allows employers to create discounted offers on insurance and administration costs for their employees (if they choose to do so).

Self-managed super funds

Also known as an SMSF, these are small funds with less than five members (where each member is a trustee). An SMSF is generally set up for funds with higher account balances, and they’re usually administered with the help of a tax adviser or accountant.

An SMSF can be expensive to run and they take time to manage. Additionally, if you fail to comply with the requirements of the fund, the penalties imposed by the regulators can be very costly.

Finding what’s right for you

Most of the time, you have the option of choosing what kind of fund you’d like your employer superannuation contributions sent to – but be sure to check with your employer if any restrictions apply.

If you’re unsure what kind of fund will suit you best, reach out to your current super fund (if you have one), or a financial planner. You can also research more on the Money Smart website (https://moneysmart.gov.au/).

Important information

This information was prepared by Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life). A copy of the Product Disclosure Statement can be obtained by contacting Resolution Life. This general advice has been prepared without taking into account your particular financial needs, circumstances or objectives. You should consider the appropriateness of this information in light of your circumstances. This advice is based on our understanding of current law as at March 2022, and is based on its continuance unless stated otherwise. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. Resolution Life do not actively monitor breach of superannuation contribution caps. You should keep track of the contributions made to your account in respect of the caps applicable to you. You should obtain professional advice before acting on the information contained in this communication. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Resolution Life is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

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