Superannuation often takes a back seat for many of us early in our working lives as it can seem like something to worry about 'down the track'. However, it is very important for us all to acquaint ourselves with our Superfunds and how they are being managed to ensure that 'down the track' our funds are in the healthiest position possible and are able to service their task of providing for our retirement. Below we discuss the basics of Superannuation and how to stay informed:
What is Super?
As we touched on above, Super is money set aside across your lifetime in order to provide for your retirement. Building our Superannuation accounts usually begins when we commence employment by way of compulsory employer superannuation contributions (currently 9.5% of your ordinary times earnings). Super Funds then invest this money in assets such as shares, property and managed funds in an aim to derive earnings and increase the fund balance. Most industry funds will have a diversified portfolio in order to minimise the risk of investing.
Building your Super Fund
Compulsory employer contributions
Most employees are entited to be paid these contributions for the term of their employment. The current rate is 9.5% as stated above. Generally you will be able to elect the Super Fund your employer makes these contributions into. Compulsory employer contributions are paid quarterly based on your earnings for the period. You can monitor these payments by communicating with your Super Fund or if you have any concerns you can contact the Tax Office.
There are a range of ways in addition to employer contributions in which you can add to your Super Fund. Some of these are:
- Personal Contributions
- Government Contributions
- Salary Sacrifice
To discuss these methods of contributions and the availability of these options for your specific circumstance please contact your Accountant or Client Manager.
Keeping up to date
Early in our working careers where we often jump from job to job it is easy to all of a sudden have a number of Super Funds open at any given point. Some of these smaller funds can easily fall through the cracks when your details change and you don't update them with your fund. The best thing to do in this situation is to arrange to have all of your Funds combined into one. Not only is this easier to manage but it also means you are only paying one set of fees each year. To track down lost superfunds the ATO has a great tool called Super Seeker.
Accessing your funds
There are very strict rules in place when it comes to accessing your Super Fund benefits. In general you are able to access the finds when you reach preservation age and retire, or once you turn 65. There are also very limited situations in which access is allowed however we strongly advise you discuss these options with your Client Manager prior to withdrawing funds as there are hefty penalties in place should early access without reason occur.
If you have any questions at all regarding Superannuation please feel free to contact your Accountant and we are always happy to help!