Superannuation (Super) is a tax-effective way to save for retirement. However, it can also be complex, so it's wise to get expert advice.
While there are a few exceptions, generally your employer must contribute 9% (there are limits for high income earners) of your salary into a complying Super fund.
You can also make additional contributions through salary sacrifice or after tax. Again there are limits, and in some cases lower income earners also receive contributions from the Government.
The money is then invested by the fund on your behalf. The benefits are many, however four stand out.
In most cases you have the right to choose your own super fund. However, there are some workers under industrial awards who don't have this choice. You can find out what applies to you by asking your employer or visiting the ATO and searching 'choosing a super fund'.
In most cases if you choose to do nothing, your super will be invested in the fund selected by your employer.
In terms of which fund to use, you have four basic options:
Try to choose a fund that has a history of producing solid returns and matches your own 'risk profile'. This is your comfort level with the strategies employed and it will change depending on your circumstances and the time you have to retirement.
Does the Super fund offer a pension option?
Not all funds offer this option and the closer you get to retirement the more important it may become. For example, if the fund doesn't offer a pension option then when you turn 55, you may have to switch funds to take advantage of strategies such as Transition to retirement.
Each fund should provide what is known as a Product Disclosure Statement. This statement should clearly outline the following:
When evaluating performance think about the following:
|Self-Managed Superannuation Funds (SMSF)|
You have the option of starting and managing your own superannuation fund. This is an increasingly popular strategy for people who want to enjoy the control and flexibility over their Super investments.
However, the investments you make must still comply with the regulations set out by the ATO.
For example, you can't use your Super fund to buy your home, but you can invest in property.
For more information about the regulations go to the ATO website and put 'Self-Managed Super Fund' into the search box.
The basic structure of an SMSF is as follows:
Five things to think about:
If you've changed jobs in the past, or switched funds for any reason, it's possible you have money invested in a Super fund that you're not aware of. This is known as lost super.
You can track it down through the ATO – go to the ATO website click on the 'individuals' page and type 'Super Seeker' into the search box on the top right hand corner.
While there are special exemptions in a few circumstances, in most cases you can't access your super until a certain age.
The age range is currently between 55 and 60 (depending on when you were born) and you can access a calculator to determine what applies in your case at the Moneysmart website.
When you do withdraw your super in retirement you generally have three choices:
Want more information on Super and your options?
|How we can help|
Superannuation can be complex. Deciding if it's best to make additional contributions or if you should invest elsewhere, along with what to do as you approach retirement takes specialist expertise. Fortunately, we can help.
An A-Z Review® with an ANZ Retirement Banking Specialist: There is more to retirement than just your Superannuation. Only ANZ has Retirement Banking Specialists, professionals who know how to help you make the most of your everyday banking.
An ANZ Financial Planner could help you with strategies designed to grow your Superannuation leading up to retirement and to maximise your income in retirement. Your initial discussion is complimentary and without obligation.
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ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited, ABN 11 005 357 522, the holder of an Australian Financial Services licence.
The information provided is general information only and does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. Before making any decision to acquire, hold or sell any financial product, ANZ strongly recommends that you seek financial planning and/or tax advice and read the relevant Product Disclosure Statement and/or Terms and Conditions.