Nav­i­gat­ing su­per

The Weekly Advertiser Horsham - - Education Week -

If the ins and outs of su­per­an­nu­a­tion leave you con­fused, the an­swers to these fre­quently asked ques­tions will help you un­der­stand the ba­sics.

How much do I need to re­tire? Ac­cord­ing to the As­so­ci­a­tion of Su­per­an­nu­a­tion Funds of Aus­tralia, ASFA, a cou­ple re­quires sav­ings of $640,000 if they wish to en­joy a ‘com­fort­able’ life­style in re­tire­ment. For a sin­gle, the fig­ure is $545,000. Due to sup­port from the age pen­sion, a sin­gle or a cou­ple can fund a ‘mod­est’ life­style with sav­ings of just $70,000 at re­tire­ment.

How is my su­per taxed? Broadly, con­tri­bu­tions are cat­e­gorised as ei­ther con­ces­sional or non-con­ces­sional.

Con­ces­sional con­tri­bu­tions are con­tri­bu­tions on which an em­ployer or an in­di­vid­ual has claimed a tax de­duc­tion.

Non-con­ces­sional con­tri­bu­tions are made from af­ter-tax in­come. They in­clude many per­sonal con­tri­bu­tions and gov­ern­ment co-con­tri­bu­tions.

Con­ces­sional con­tri­bu­tions are taxed at 15 per­cent within the su­per­fund, with a tax off­set avail­able to low in­come earn­ers. Non-con­ces­sional con­tri­bu­tions are not taxed within the fund.

In­vest­ment earn­ings are taxed at 15 per­cent in the ac­cu­mu­la­tion phase.

Over age 60, earn­ings in the pen­sion phase, and any pay­outs from the su­per fund, are tax-free.

How can I con­trib­ute to su­per? If you are over 18, em­ployed, and earn more than $450 a month, your em­ployer will con­trib­ute 9.5 per­cent of your or­di­nary time earn­ings to su­per. You can fur­ther boost your su­per by: • Ask­ing your em­ployer to make con­ces­sional salary sac­ri­fice con­tri­bu­tions from your pre-tax in­come. • Mak­ing per­sonal con­tri­bu­tions from your af­ter-tax in­come. Sub­ject to set lim­its you might be able to claim a tax de­duc­tion for these con­tri­bu­tions in which case they will be­come con­ces­sional. If no tax de­duc­tion is claimed they will be non-con­ces­sional. • Low to mid­dle in­come earn­ers who make a per­sonal non-con­ces­sional con­tri­bu­tion might re­ceive

up to $500 as a gov­ern­ment co-con­tri­bu­tion. Age lim­its and work tests might ap­ply to some types of con­tri­bu­tion.

When can I ac­cess my su­per? You can ac­cess your su­per when: you turn 65, even if still work­ing; when you reach preser­va­tion age – be­tween 55 and 60 de­pend­ing on date of birth – and have re­tired; if you start a tran­si­tion to re­tire­ment, TTR, in­come stream; or if you face se­vere fi­nan­cial hard­ship, spe­cific med­i­cal con­di­tions or un­der the first home su­per saver scheme.

Who can I leave my su­per to? If your su­per fund al­lows bind­ing death ben­e­fit nom­i­na­tions, you can elect to have your su­per­an­nu­a­tion paid to your le­gal per­sonal rep­re­sen­ta­tive.

The money will then be dis­trib­uted as in­structed by your Will.

Al­ter­na­tively, you can in­struct your fund trus­tees to pay your death ben­e­fit to one or more of your ‘de­pen­dents’. Un­der su­per­an­nu­a­tion law these are: your spouse, in­cludes same-sex and de facto partners; chil­dren; fi­nan­cial de­pen­dent; or peo­ple you had an in­ter­de­pen­dency re­la­tion­ship with.

With­out a bind­ing nom­i­na­tion, your su­per fund’s trus­tees de­cide which de­pen­dents will re­ceive the death ben­e­fit. They will be guided, but are not bound by, any non-bind­ing nom­i­na­tion.

How do I make the most of my su­per? Su­per­an­nu­a­tion re­mains, for most peo­ple, the best ve­hi­cle within which to save for their re­tire­ment. How­ever, it can be com­pli­cated and there are many rules to nav­i­gate.

Ready to un­earth those op­por­tu­ni­ties and make the most of your su­per? Now is the per­fect time to talk to your fi­nan­cial ad­viser.

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