superannuation statement Archives

The ‘what, why and how’ of contributing to super

22 December, 20213 February, 2022 Updated on3 February, 2022 Superannuation

Despite frequent changes to its governing rules, superannuation remains, for most people, a tax-effective environment in which to save for retirement. Here’s a quick Q&A on the ‘what, why and how’ of contributing to super from this point on. Why should I contribute to super? Some super contributions and the investment earnings within super funds are taxed at 15%. As this is lower than the marginal tax rate for people earning more than $18,200 per annum, less tax is paid on the money going into super than if it was paid to you as normal income. The higher your marginal tax rate, the greater the benefit. What types of contributions can I make? Concessional contributions. These are contributions on which you or your employer has claimed a tax deduction. They are taxed at 15% within the super fund. If you earn more than $250,000 pa you will be taxed an additional 15% on the concessional contributions above this threshold. Concessional contributions include: Compulsory employer (Superannuation Guarantee) contributions. Your employer must pay 10.0% (10.5% as from 1 July 2022) on top of your ordinary time earnings to your super fund when you earn more than $450 per month. Salary sacrificed contributions made from your pre-tax income. Personal contributions on which you claim a tax deduction. Cap: $27,500. The unused portion can be carried forward and used in future years if your total super balance is under $500,000. Non-concessional contributions. Contributions on which a tax deduction has not been claimed, including: Personal contributions on which you do not claim a tax deduction. Spouse contributions. These can generate a tax offset of up to $540 if your spouse earns less than $40,000 pa. Government co-contributions. Worth up to $500, co-contributions are available if your taxable income is less than $56,112 and you make a non-concessional contribution. Caps: $110,000 pa, or $330,000 if a further two years of contributions are brought forward. Note: you cannot make non-concessional contributions if your total superannuation balance exceeds the general transfer balance cap (the amount that can be transferred to pension phase), currently $1.7 million. Who can contribute to super? You can make personal contributions to super if: you are under 67 years of age; you are aged between 67 and 75 and were gainfully employed (including self-employed) for at least 40 hours over 30 consecutive days during the financial year. You can claim a tax deduction for these contributions, but make sure you don’t exceed the $27,500 annual cap for concessional contributions from all sources; or the $110,000 cap on non-concessional contributions. Spouse and government co-contributions can only be received up to age 70 provided you pass the work test. You are eligible for mandated employer contributions, including Super Guarantee payments, regardless of your age. Get it right A successful super contribution strategy can mean the difference between looking forward to retirement and dreading it. Talk to your qualified financial planner and get the right advice on the best ways to boost your super. The information provided in this article is general in nature only and does not constitute personal financial advice.

Unlocking the mysteries of your super statement

8 December, 20211 December, 2021 Updated on1 December, 2021 Superannuation

Superannuation statements. Boring, right? But if, like many people, you toss your annual super statement in a drawer or hit delete, you could be depriving yourself of many thousands of dollars just when you need it. So, it’s worth the small effort to take a closer look at your superannuation statement. A quick check of your statement may reveal some of the common problems that occur with super; and the sooner these are fixed the quicker your savings can increase. What to look for The layouts of statements vary between super funds, but there is standard information that must be provided. Some items may appear in summary form, with a detailed breakdown shown elsewhere. Here are the key things to look for: Contributions or funds in This will cover employer and personal contributions, government contributions and rebates, plus any rollovers. If you’re an employee earning more than $450 per month, your employer should be paying 10% of your ordinary time earnings to your super fund. Payments can be made either quarterly or monthly. Funds out Most commonly this comprises administration and investment management fees, and any insurance premiums. Excessive fees can place a real drag on the performance of your savings, so check that they are competitive with other funds. Investment earnings This covers interest and share dividends, along with any capital growth in the value of your investments. Be aware that depending on your specific investment mix and the performance of markets, this figure may sometimes be negative. Insurance cover Your super fund may provide death and/or disability insurance. If so, check that it is appropriate and adequate for your needs. Maybe you are paying for insurance cover you don’t need or are inadequately insured. Investment options This will show what your money is invested in, and in many cases the performance of each investment. Your investment choices will be one of the main influences on the ultimate value of your retirement savings. Professional advice in this area is strongly recommended. Other things to check Have you provided your tax file number? If not, the fund will be deducting too much tax from your contributions and earnings. Have you made a binding death benefit nomination? This allows you to choose, within applicable rules, who your superannuation is paid to upon your death. Is your name and address up to date? Is it possible you have ‘lost super’? This occurs when a super fund can no longer contact you. The Australian Tax Office can help you find lost super. Start here https://www.ato.gov.au/forms/searching-for-lost-super/ More than one statement? Ideally, you should consolidate all your superannuation into one fund. This will avoid duplication of fees and insurance premiums and make your super much easier to manage. Invaluable advice Super is one area in life where professional advice can really pay off. If you need help with understanding investment options, consolidating multiple super funds, finding lost super, or ensuring you have the right insurance cover, talk to your financial adviser. The sooner you do, the sooner you’ll be on track to growing your super pot of gold. The information provided in this article is general in nature only and does not constitute personal financial advice.