At Approved Financial Planners, we provide superannuation and self managed superannuation advice to our clients in the Perth area. We would like to present a short beginner’s guide to understanding superannuation. We have gone to the Government’s website, https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works, to gather some basic information that you may find helpful in understanding superannuation.*
What is Superannuation?
Superannuation is a process in which your employer currently pays 9.5% of your salary into a fund earmarked for your retirement. By 2025, this contribution would have increased to 12%. You are allowed to pay your own money into your super fund account to increase the fund. Money gained from super fund investments is usually taxed at a lower rate than the same investments made outside of your super.*
Choosing a Super Fund
Your money is usually invested into a super fund of your choosing. However, some employers decide where your funds will be invested. If you want to decide where your super fund will be invested, you must fill out a form from the Australian Taxation Office (ATO). It is called a “Standard Choice Form.”*
Making Contributions
Your employer must base their contribution on your “ordinary time earnings,” which include all hours of work, over-award payments, allowances, commissions, bonuses and some paid leaves. You have the option of contributing extra to your super.*
You may do this by adding a lump sum into your account from your savings. You can also transfer funds from another super fund into your current one. You may also ask your employer to deduct a certain amount from your pay and contribute it into your super for you.*
Where Your Super Money Goes
The money goes from your super fund account into a super fund that invests your money to make money. Different super funds have different dynamics. Some are linked to the market, which makes them move up and down as the market goes. Some are more stable.*
Call 08 6462 0888 to learn more.
*ASIC, MoneySmart, “How Super Works.”