Superannuation (or ‘super’) is money set aside while you’re working, so you’ll have money to live off when you retire. Your employer, or you if you’re self employed, direct a percentage of your salary to your nominated super account. This money is invested by your super fund and earns returns, which will help grow your retirement savings.
What is superannuation?
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Super-annuation what you ask? Superannuation. It's an important way that current you can help out future you. It sounds complicated, but it's not. In fact, it's something that happens without you having to do much at all.
When current you has a job, your employer pays your salary, and puts a bit extra in super for future you, currently 9.5% of your salary. The money is still yours. It's just put into an account for safekeeping, so that one day, future you will be able to live a bit more comfortably.
All employers must make super contributions for employees, thanks to a little thing called the superannuation guarantee. It means that if you're 18 years old or more, and earning $450 before tax per month, you should be entitled to super. If you're under 18, you'll also be entitled to super if you're working at least 30 hours a week.
The money is held in a super fund, and just like banks, there are many to choose from. Which one you choose can make a big difference on how much super you end up with. While you're filling up your super from the money you earned, your fund can make investments for you, which can help grow your savings, so you want to choose a fund like Australian Super, with low fees and strong investment returns, and where profits go back to the fund.
Insurance is important because it can help protect both current you and future you financially. If current you gets injured or is too sick to work, it's important to remember that just as you're filling up your super, money can trickle out through fees, the cost of insurance, taxes, and loss from investments, so it's worth taking the time to choose a good fund when you start working.
While future you seems far away, there are a few things that current you can do to help them out:
Make sure your super fund has your tax file number. If you don't, your super could be taxed as high as 49%. If you do, you'll be taxed from 15% to 30% depending on your income.
You also need to tell your employer which super fund you have chosen. If you don't, they'll sign you up to whichever fund they use, and you can lose track of your money or end up paying lots of fees for having two accounts.
Current you should also make some savings goals. If you get a pay raise, think about putting this extra money into a savings account, or your super fund. Future you will thank you for it.
Generally from the moment you start working and earn above $450, you’ll be putting money aside for your super with a fund like AustralianSuper.
Your savings grow because your employer pays a compulsory sum of money into your super account. This sum, called the Superannuation Guarantee, is 9.5% of your before tax income.
You can add more money to your super by choosing the option that works best for you like before or after tax contributions.
When you join AustralianSuper, you’ll automatically be invested in the Balanced option, unless you choose another investment option.
Your super account can also come with different types of insurance cover that you can access if you’re unable to work due to illness or injury. Cover includes Total & Permanent Disablement Income Protection and Death.
As you get closer to retirement, you can transition from your super account into a Choice Income account to pay yourself a regular income in retirement.
There’s a bit to consider when choosing the right super fund. That’s why we’ve made it easy to see the AustralianSuper difference.