Disclaimer: The information provided in this blog is intended for general information and should not be taken as financial advice. Always consult with your financial advisor for personalized guidance.
Understanding superannuation is essential for everyone who earns a paycheck in Australia, especially for Self-Managed Super Fund (SMSF) holders. A well-planned super can be the key to a comfortable retirement. In this blog post, we will explore what superannuation is, how you can keep track of it, and ways to grow your savings.
What is Superannuation?
Superannuation, commonly referred to as ‘super,’ is a long-term savings arrangement that your employer contributes to on your behalf. These contributions accumulate over your working life, allowing you to have a financial cushion for your retirement years. The idea is simple: the more you save, the more you’ll have to enjoy in your later years.
Typically, you can’t withdraw these funds until you retire or reach the age of 65, except for certain specific circumstances like financial hardship or particular medical conditions.
How is Money Paid Into My Super?
Employers are obligated to contribute a specific percentage of your ordinary time earnings into your super account. This percentage is known as the super guarantee rate and is subject to change over time. Ordinary time earnings include your regular wages, certain bonuses, and allowances. However, overtime pay is generally not included in this calculation.
Additionally, you can boost your super savings by contributing your own money. Under certain conditions, the Australian Government might also add to your super fund.
What if My Employer Isn’t Paying the Correct Amount?
If you suspect that your employer is not making the correct super contributions, have a conversation with them. Ask about:
- The frequency of super payments
- The fund they are contributing to
- The amount being contributed
You can use tools like the “Estimate my super” to verify if you’re receiving the correct contributions. Always check your super fund member statements or contact your fund to confirm that the payments have been made.
Keeping Track of Your Super
The first step in managing your super effectively is ensuring that your Tax File Number (TFN) is linked to your super fund. Having your TFN registered makes it easier to track, transfer, and receive super payments.
To keep a close eye on your super accounts, consider creating a myGov account and linking it to the Australian Tax Office (ATO). This will allow you to:
- View details of all your super accounts
- Use the YourSuper comparison tool to evaluate your fund’s performance
- Locate ATO-held super
- Consolidate multiple super accounts
Accessing Your Super Benefits
In most cases, your super can only be accessed upon retirement. However, there are exceptions, such as severe financial hardship and certain medical conditions. Before attempting to access your super early, it’s advisable to consult your super fund about the conditions and procedures.
For Temporary Residents
If you are a temporary resident in Australia, your employer must contribute to your super. Once you leave Australia, you may be entitled to a Departing Australia super payment (DASP). Note that New Zealand citizens and permanent residents of Australia are not eligible for this payment.
Super Money from Overseas
If you’re transferring pension funds or your own money from overseas into your super, be sure to consult a financial adviser as special tax rules may apply.
Superannuation is an invaluable financial tool that helps you prepare for a secure retirement. Whether you’re new to the workforce or an experienced SMSF holder, understanding the nuances of super can help you make informed decisions for a brighter financial future. Always consult with your super fund or financial adviser for personalized guidance.
Ready to Invest your SMSF to your mortgage?
Taking control of your superannuation is the first step toward a comfortable retirement. If you’re an SMSF holder looking to make the most of your savings, why wait? Invest them in your mortgage!