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Superannuation for Beginners: Things You Need to Know

Whether you have been hired for your first job or the one you hope to retire from, it is important that you understand your superannuation. The longer you work (and save), the better off you will be, though it is never too late to get started.

Here are some things you need to know about your super:

  • Your employer must contribute money into a super fund on your behalf. The Superannuation Guarantee (SG) laws were made in order to make sure that all employees start to prepare for the future.
  • Your SG contributions are taxed at fifteen percent, as well as any before-tax contributions you make.  This is generally much lower than your personal income tax so it makes sense to put as much money away as you can afford to.  Just remember that super is a long-term investment and you generally can’t access this money until you have reached your preservation age and permanently retired.
  • If you put more money into your super (after tax), you may receive some tax-free money from the Government. Because the Government wants to help you in saving for your retirement, they will pay fifty cents for every dollar you contribute into your super fund, up to five hundred dollars a year, depending on your level of income.  This is known as the co-contribution scheme. If you are a low-income earner, you may be eligible for a refund of the tax you paid on SG and before-tax contributions, up to five hundred dollars.  This is known as the Low Income Superannuation Tax Offset.
  • Though you should put as much money away as you can afford, there is a limit. The Government has a cap on how much money you and your employer can put into your super, unless you want to pay extra tax to do so.
  • You should be able to choose the super fund that you want. Most employers offer their employees a choice of which super fund they want their SG contributions to be paid into. If you don’t make a choice, your employer chooses for you.  You should research which super fund you want your super paid into and how you want your money to be invested by the super fund. No matter what decision you make, you need to make sure that it is right for you.  You have to be happy with the risk that you are willing to take in order to have the retirement you want.
  • You will receive regular (at least annually) super statements. These statements will tell you how well your super is doing, how your investment option has performed, any fees you have been charged and other transactions (such as deductions for insurance premiums) on your super account.

Super is a great and tax-effective way to save for your future. In order to be as prepared as possible, be sure to contact us at Nationwide Super. We are here to help!

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