Superannuation
If you are now, or have been, a member of a superannuation fund then the assets you hold in funds could generate an important part of your retirement income.
What is superannuation?
Superannuation is an arrangement where people save and invest during their working lives for their retirement.
Most employers are required to contribute to their employees' superannuation, and self-employed people may receive tax deductions for contributions to superannuation.
There are complex rules on preserving and accessing superannuation benefits.
Generally, contributions to superannuation can be made up to age 74 providing the individual is still working at least part-time. Benefits are available to be withdrawn on retirement from the age of 55, (increasing gradually to age 60 for those born after 30 June 1960).
Taxation on superannuation
Investments within superannuation funds are subject to income tax of up to 15% on earnings and 10% on most capital gains along with other tax is payable for this type of investment.
The benefits taken on retirement are taxed at concessional rates up to a Reasonable Benefit Limit (RBL). If transferred to a retirement income stream, superannuation may enjoy a more favourable tax treatment.
Social security benefits
If you apply for social security benefits the value of your superannuation will not be assessed for means testing until you are at least Age Pension age.
If you could be affected by the assessment of superannuation you should talk to your Bridges financial planner who may be able to restructure your portfolio to preserve payment of your benefits.
Rollover funds
People who change jobs, or are made redundant, may ‘roll over’ their superannuation into another fund.
The fund they are leaving will calculate their entitlement and generate an Eligible Termination Payment (ETP), which can be rolled over into another superannuation fund (or a rollover fund). In some cases, the funds may be taken in cash, either totally or in part. You may, however, have to pay tax on part of the cashed amount.
Rolling over superannuation assets may not always be the best option. Your Bridges financial planner will be able to advise you whether to take cash or rollover, depending on your own particular circumstances.
Boosting your superannuation savings
There are a range of ways you can boost your superannuation savings. You may want to make automatic contributions to your superannuation from your before tax salary or consolidate your super funds into one fund.
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