Superannuation Basics

What is Superannuation?

  • Superannuation, or ‘super’, is money put aside by your employer over your working life for you to live on when you retire from work

  • Super is important for you, because the more you save, the more money you will have for retirement

  • You can only withdraw your super money in certain circumstances - for example, when you retire or turn 65 years old

How do I save in super?

  • For most people, your employer pays money - ‘contributions’ - into a super account for you. This is called ‘super guarantee’. They pay these contributions on top of your salary and wages. There are laws about how much super your employer must pay.

  • From 1 July 2022, your employer may need to contribute to your super regardless of how much you are paid per month. If you are younger than 18, you need to work more than 30 hours a week to be eligible

  • Your eligibility is determined when you are paid salary and wages, not when the income is earned.

  • This applies whether you work casual, part-time, or full-time hours, and if you are a temporary resident. You may also be eligible if you are a contractor who is paid primarily for labour, even if you have an Australian Business Number (ABN)

How is money paid into my super?

  • Your employer is required to pay a minimum amount based on the current super guarantee rate of your ordinary time earnings into super. This is set to gradually rise over the coming years

  • Ordinary time earnings are what you generally earn from ordinary hours of work, including over-award payments, certain bonuses, allowances, and some paid leave. Payments for overtime hours are generally not included in ordinary time earnings

  • You can also add your own money into your super savings, and sometimes the Australian Government puts money in too.

How do I choose a super fund?

  • Most people can choose the super fund they want their contributions paid into. If you are eligible, your employer must give you a Superannuation standard choice form within 28 days of the day you started working for them, so that you can make that choice in writing

  • From 1 November 2021, your employer may have an extra step to comply with choice of fund rules if you don’t choose a super fund. They may need to request details of a stapled super form from the ATO if you do not nominate a super fund

  • A stapled super fund is an existing super account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs.

  • The ATO will notify you if your employer makes a stapled super fund request and the fund details the ATO have provided

  • All employers have a nominated super fund, ‘or ‘default fund’, where they make super guarantee payments for their employees who have not selected a preferred fund and do not have a stapled super fund

  • If you want to have your contributions paid into an existing super account but can’t remember your super fund account details, you can use mygov to see all of your super accounts

  • The YourSuper comparison tool will help you compare MySuper products and choose a super fund that meets your needs

  • It is never too early to engage with your super. Choose your own super fund and engage regularly because the choices you make today will help shape lifestyle options for you in the future

How do I keep track of my super savings?

  • Making sure your super fund has your Tax File Number (TFN) will make it easier to keep track of your super, move it between accounts, and receive super payments from your employer or the government

  • You can check whether your fund has your TFN by looking at the statement they send you

Keep track of your super using MyGov

You can create a myGov account and link the ATO to it so you can:

  • see details of all your super accounts, including any you have lost track of or forgotten about

  • use the YourSuper-comparison-tool to compare the performance and fees of your super accounts against other MySuper products

  • find ATO-held super. If the government, your super fund, or your employer can’t find an account to transfer your super to, the ATO holds it on your behalf

  • combine multiple super accounts by transferring your super into your preferred super account - if this is a fund-to-fund transfer, it will generally be actioned within 3 working days

How do I increase my super?

  • As well as the contributions your employer pays, you can add to your super by making your own contributions. You may be able to ‘salary sacrifice’ to super from your before-tax income or contribute to super from your after-tax income

  • There are limits called ‘caps’ on the amount you can contribute to your super each financial year without having to pay additional tax. If you contribute more than these caps, you may have to pay additional tax. If you are planning on contributing more than the concessional contribution cap (currently $27500) to your super (including employer contributions), seek advice from a licensed financial planning professional

Government super contributions

  • If you’re a low-income or middle-income earner, you may be eligible for contributions from the Australian Government

  • Lodge your tax return so the ATO can check if you are eligible for a super co-contribution up to $500. It’s important you lodge a return even if you don’t think you will get a refund. You don’t need to apply for the super co-contribution

How do I access my super benefits?

  • Generally, you can access your super money when you retire. However, there are some circumstances where you can access your super savings early, such as severe financial hardship and specific medical conditions

  • If you legitimately need some of your preserved super earlier, ask your super fund about whether you may be able to access it before applying

Temporary residents leaving Australia

  • If you are a temporary resident working in Australia and you are eligible for super, your employer must make super guarantee contributions for you. You may be paid your super money once you have left Australia. This payment is called a Departing Australia super payment (DASP)

Super money from overseas

  • If you are bringing your own money or pension funds from overseas, there may be special tax rules that you need to know about

60-second Financial Health Check!

Use this quick 60-second Financial Health Checklist to see if you need a more thorough examination of your Financial Planning, Superannuation, Insurance or Investment needs.

Review your super accounts

Most people can choose which super fund they'd like their super contributions paid into. You can go with your existing fund, your employer's fund, or choose a different fund.

Your employer will give you a 'standard choice form' when you start a new job. This sets out your options.

What to look for in a super fund

When you're comparing super funds, weigh up fund performance and the fees you'll pay against other factors such as risk, investment returns, services and insurance.

  • Performance

Compare your fund's investment performance over at least five years. Consider the impact of fees and costs.

Compare like with like. For example, only compare a balanced option with another balanced option, and try to use the same time period.

  • Low fees

All super funds charge fees. Fees are either a dollar amount or a percentage, or both. Either way, generally the lower the fees, the better. Fees are usually deducted monthly and also after an action such as switching investments.

  • Insurance

Super funds typically have three types of insurance for members:

  • life (also known as death cover)

  • total and permanent disability (TPD)

  • income protection

When comparing the default insurance offered by super funds, look for:

  • the premium rates

  • the amount of cover

  • any exclusions or definitions that might affect you

Investment options

Most super funds let you choose from a range of investment options.

Options usually include:

  • growth

  • balanced

  • conservative

  • cash

  • ethical

MySuper

Some funds will let you choose the weighting of different asset types or direct investments.

Services

Super funds may offer other services which attract special fees. These can be things like financial advice or arranging to split your super following a separation.

Compare super funds

You can find out about and compare super funds by using:

  • the ATO's YourSuper comparison tool, an online list comparing MySuper products

  • the product disclosure statement (PDS) for each product offered by a fund

  • super comparison websites offered by private companies

What to do if your MySuper product is underperforming

If you have a MySuper product, your super fund must let you know if it has performed badly under an annual performance test done by the Australian Prudential Regulation Authority (APRA).

To help you make a decision about whether to switch funds and which product to switch to, you can use the ATO's YourSuper comparison tool.

Are you TAX ready?

Use this 60-second Financial Health Check to see if you need a more thorough examination of your financial affairs ready for tax time!

A Financial Services Council and Deloitte Access Economics Study, reveals that lack of financial literacy, myopia, complexity of long-term decision making, loss aversion, reliance on mental shortcuts, a tendency to procrastinate and general apathy are the causes of chronic disengagement with super

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