Super essentials going into the new financial year

• How to make additional voluntary contributions.
• Where your fund invests your money.
• Telling your fund how you want your money invested.
• The benefits of rolling your super into a single account.

Making additional contributions

Making additional contributions to your super is a way to add to your super balance that may be able to reduce your tax bill.

Concessional contributions are pre-tax contributions that can include employer contributions including salary sacrifice contributions. Non-concessional contributions are after-tax contributions that can include personal contributions you make into your own super account that are not claimed as a tax deduction and spouse contributions.

There are limits to how much you can put into your super each year. Pre-tax contributions are limited to $27,500 and the annual non-concessional contribution cap is $110,000.

Depending on your age and total super balance on 30 June of the previous financial year, you may be eligible to make up to three years of non-concessional super contributions using the bring-forward (or carry forward) rule.

Review how your fund invests your money

Super funds have a team of experts working on managing investments for members, creating long-term strategies to increase member wealth and meet the fund’s investment objectives. They can be invested in a wide variety of assets, such as airports or toll roads, or companies that invest in renewable energy or medical research.

Your money can be invested in things such as growth assets, which includes shares and property. While growth assets may experience more fluctuation in value, they have the potential to generate higher returns over time.

Defensive assets, such as term deposits and fixed-interest investments, including government bonds or corporate debt, are relatively inexpensive and can provide more modest returns at lower levels of risk.

Having a diverse investment strategy, with a mix of assets, can help spread your risk. This means your balance doesn’t rely on a specific asset, industry or company. Having all your eggs in one basket could mean that an incident such as a property market collapse or interest rate rise could devalue your holdings.

Choose the investments that suit your needs

Once you understand how the fund invests, you should review how your particular funds are invested.

Most funds provide members with a default investment that’s fairly balanced. Selecting how you are invested can have a significant impact on how much you have at retirement.

Not sure of your current investor profile? Check out your annual statement or log into your My Resolution Life portal. If you haven't registered yet, you can do so by following a few easy steps, simply visit myresolutionlife/register.

Here are four investor profiles you’ll likely see:

Balanced

A balanced investment portfolio aims for reasonable growth of your super over the medium to long term. There’s a bit of risk, but not too much. It usually involves investment of about 70% in growth assets and the remaining 30% in defensive assets. Most super funds offer this as the default option for its members who don’t select a profile when they join

Growth

A growth portfolio aims for higher average investment returns over the long term. It invests in assets that are expected to outperform the overall market. However, it can involve higher risk as it could also mean taking on greater losses when the market is underperforming. The mix will typically consist of about 80-85% growth assets, such as shares and property, and the remaining 15-20% defensive assets, such as fixed interest and cash-based investments.

Conservative

A conservative approach involves investing about 70% of your super in defensive assets to reduce the risk of investment loss. You’ll have less chance of suffering a bad year, but you’ll also need to be willing to accept lower returns.

Cash

Investing in Cash involves investing in deposits with Australian banks. With a 100% cash investment strategy, it is likely to generate stable returns however may not provide long term growth of other assets.

Check for lost super

New stapling rules mean your chosen super fund can stay with you when you switch jobs or careers. This will reduce duplicate fees from multiple accounts, which can erode your balance over time.

Unsure if you have multiple accounts? You can check for lost super and consolidate your accounts into one through myGov.