Superannuation – Be Engaged
Superannuation – all workers have it. But why is it important to be engaged with your super?
Alman Partners can help you build a brighter future with our expert superannuation advice.
Australia is one of the few countries in the world to have a three-tier strategy for retirement funding. Australian retirees generally rely on a mix of:
- Personal savings
- A government pension (such as the Age Pension)
While this is a robust strategy, the government pension represents a significant proportion of the total federal budget each year. With a population shift occurring (meaning fewer taxpayers to support more retirees) and longer average life expectancy, the pension will be placed under even more strain moving forward.
A Rice Warner report from May 2018 shows the expected decline in the eligible population receiving the Age Pension over the coming 20 years:
This means getting involved with your superannuation is an important strategy for funding your retirement.
Superannuation Versus Personal Savings
Superannuation offers a range of benefits, including:
- Tax effective savings. Contributing money to superannuation provides individuals with a number of tax reductions. Additionally, any earnings and income on the fund throughout a member’s working life receive concessional taxation treatment (generally 15%).
- Disciplined savings. For many, the thought of your money being “locked away” seems scary – but it’s a great way to have a disciplined savings plan that can’t be “dipped into.”
- Tax-free. When superannuation assets are used to commence a retirement pension, there’s no tax on any earnings or income in the fund.
What do I need to do?
One of the biggest downfalls of the current super system is that contributions are made on a default basis. In many cases, it’s on the employer’s recommendation as to which fund money is contributed to.
Outside of how the money is invested, each fund has different rules regarding contributions, insurances, and estate planning (beneficiary nominations). The super system can be quite complex and seeking super advice from a professional is money well spent.
Contact us today for obligation-free retirement advice.