Let’s Talk About Superannuation…

Superannuation is a term thrown around all the time, and it’s something you are accruing if you have a job. But how much do you actually know about superannuation?

Thanks to COVID-19 and the government scheme that allowed people to have early access to their superannuation, it’s more important than ever to have a good understanding of what super is and how it works.

What is superannuation

Superannuation, or super, is money that is set aside and saved so that you have money when you retire. Once you retire and no longer have a regular income from work, superannuation is the Government’s way of ensuring you can still live happily and comfortably. More simply put, the Australian Taxation Office defines it as ‘a system where money is placed in a fund to provide for a person’s retirement.’

The more superannuation you put away now, the more money you will have to enjoy when you retire. On average in Australia, people expect around 20 years of retirement, and you want to enjoy that time! So knowing and understanding what superannuation is all about is very important.

How does it work?

In Australia, if you have a job, generally your employer is required to pay money into a super account for you, which is then managed by a super fund. In general, an employer must pay you super contributions if you are 18 years or older and are paid $450 or more, before tax, in a calendar month. And if you are under 18, being paid $450 or more before tax in a calendar month and work for more than 30 hours per week. Superannuation applies to you whether you work casual, part time or full time, and is also available for temporary residents.

Currently, your employer is required by law to pay 9.5% of your income into your superannuation. You are also able to make extra contributions to your super account if you choose. If you are self-employed, you can choose how much of your income goes towards your superannuation.

To make sure that your super is secure and ready to go from the moment you retire, there are government restrictions as to when you can access your superannuation account. There are few exceptions other than retirement, and one of these exceptions is the COVID-19 Early Release of Super scheme.

Choosing a super fund

You are able to personally select what super fund you want to use. Workplaces will ask for your super fund information which is your opportunity to select your preferred option.

All employers will also have a nominated super fund that they will make guaranteed payments to if you have not provided a preferred fund. This means that you will always be accruing superannuation, no matter what.

How to I keep track of it all?

There are a few ways to track your superannuation and to keep on top of it. Having your TFN (Tax File Number) on file with your super fund makes it a lot easier to keep track of your superannuation, move it between accounts as well as to receive payments from your employer or the government.

If you don’t remember what superannuation fund you are with, you can access the information through the MyGov website. When possible, it is good to combine your funds, rather than having your super split over multiple funds. Having more than one account means paying multiple fees. Combining your super is not only more convenient, but it can also help you save and ensure you don’t lose any of your super. The superannuation fund of your choice can provide more advice as to how to combine your super funds.

If you still need more clarification or help when it comes to superannuation, we are more than happy to help!

Setting up your super well now is setting yourself up better for the future, so be sure to make it a priority.

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