Superannuation, 'Super', is the money you have accumulated during your working life for your use when you retire. As your super is a lifetime investment, the earlier you start saving, the more money you will have for your retirement. Super can be complicated as there are a number of obligations and types of contributions to be considered. Sports Super™ takes the complexity out of superannuation for you.
When you start full time work, you are entitled to receive superannuation. Your employer is required to contribute a % of your regular earnings (currently 9.5%), into a superannuation fund of your choosing. Your employer is obliged to make you aware of the company's (default) super fund, whilst giving you the option to choose either the Company’s fund or an alternative complying fund, such as the AMP or BT options available through Sports Super.
Choosing a fund
Choose a fund that has low fees and strong long term performance to make sure your super grows as much as possible. If you don't choose a super fund, your employer will put your super into an account in your name in the Company’s fund.
Since 2006, most people have been able to choose the super fund they want their member and employer contributions paid into. You can choose your own fund if:
- the super fund is a complying super fund;
- your super is paid under a federal award or a former state award, now known as 'notional agreement preserving state award';
- you are employed under another award or agreement that doesn't require super support; or
- you are not employed under any award or industrial agreement (including contractors paid principally for their labour).
Sports Super™ takes the complexity out of superannuation for you. Contact us to arrange an appointment to find the best super fund for you.
Comparing apples with apples
|Things to compare||What to look for|
|Fees||Obviously, the lower the better. Fees can be calculated as a flat fee or percentage so you may need to do some calculations.|
|Investment options||Super funds often have 'mixes' depending on how conservative (safe) or aggressive (ie with greater risk) you wish to be.|
|Performance||Look at the funds performance over a long period, not just a year (performance over five years+ is a useful guide).|
|Insurance||Look for what insurance is included and how much it costs.|
You can make additional contributions to your super by salary sacrificing. When doing this, you may be eligible for the government co-contributions scheme. This is when you arrange to have part of your 'before-tax' salary paid into your super. These contributions are employer contributions and count toward your contributions cap. The contributions cap is the limit you can make each year before you must pay extra tax. Exceeding the cap can have tax implications and can be expensive. You should obtain appropriate advice before making additional contributions into your fund.
The amount of tax paid on contributions depends on your age, the amount and whether it is a before or after tax contribution.
Your Tax File Number (TFN) is the key to paying less tax. If you haven't provided your TFN to your super fund, you'll pay more tax up to 46.5% on salary sacrifice and employer SG contributions.
Super funds can't accept any after-tax contributions from you if you haven't provided your TFN.
Tax on investment earnings
Investment earnings are taxed up to 15%. This tax, along with investment management fees, is deducted before your investment earnings are applied to your account. Earnings are applied to your account as 'crediting rates' every six months or when you transfer out of the Fund or switch investment options.
Limits on the lower tax rates on contributions
If you are less than 50, any before tax contributions, such as Superannuation Guarantee and salary sacrifice, of more than $25,000 per year, will be taxed at the highest rate of 46.5%.
However, members aged 50 years or over were entitled to a higher limit of $50,000 pa until 1 July 2012, when the limit was reduced to $25,000 for all members regardless of age. If you exceed this limit, the contributions will be taxed at the highest marginal tax rate of 46.5%.
After-tax contributions made by members (also called non-concessional contributions), are not taxed when paid into super because they've already had income tax deducted.
These contributions are limited to $150,000 per person per year or $450,000 over three years for members under age 65. Excess contributions are taxed at 46.5%.
You can access your super when you retire at your 'preservation age' or when you turn 65. In some circumstances, you can access your super early.
Most superannuation funds offer death, disability or income protection insurance. Taking insurance through your superannuation can be a cost-effective and efficient way of ensuring you have adequate and affordable insurance cover.
Unlike bank accounts, most superannuation funds are charged 'management' or 'administration' fees as a percentage of the investment. For example, if your superannuation fund balance is $100,000 and the fee is 1.0% pa, you will be charged $1,000 annually for your funds to be managed and administered by the superannuation product provider. When comparing funds, you should look at what is included in the administration cost.
Higher fees will impact on the level of retirement income you can look forward to. This is why it is advisable to consider super funds which offer low fees, such as Sports Super with its 1.0% fee arrangement established with AMP or its 1.04% offering through BT.