Superannuation is another one of those things that no one learnt in school, but probably should be taught just like tax. So here is a blog that simplifies what this is and how important it is for your future.
What is Superannuation?
Personal superannuation (often simply known as super) is money that’s put aside and saved while you’re working, so you can enjoy a regular income later in life when you retire. By investing money into a superannuation fund, you’re building a nest egg to live on when you’re no longer earning a wage or income as a sole trader. And the more you put away now, the more you’ll be able to live comfortably in your retirement.
How does Super work?
If you work for a company or organisation, generally your employer must pay money into a superannuation account in your name, which is then managed by a superannuation fund. Currently your employer must contribute 9.5% of your income, including bonuses, commissions and loadings. This is called the super guarantee and it’s the law. You can also add extra money to your super account. When adding money to your super account this counts as a tax deduction! (You must fill out an intention to claim form with your super fund before loading your tax in order to claim this).
If you’re self-employed you can choose how much of your income you set aside for superannuation. It would be a good idea to match what a wage income would give you. For example, if you are earning $50,000 per year, 9.5% of that is $4,750. So that is how much you should be putting away each year into super.
When can you access your Super?
You can only have early access to your super in very limited circumstances, such as illness. You can access your super when you turn 65 (even if you haven’t retired).
Do you have owed Super?
You can see your super accounts on your MyGov account. This is also a great place to reconcile all your super into one account – which will give you a better return in the long run. It is important to check that your employer is paying the correct amount of super that is owed to you. If you think your employer has not paid your Super, please log in to your MyGov account linked to the ATO and click on ‘Manage My Super’. Individuals can complete a super search by phoning the ATO’s automated super search line on 13 28 65. You will need your TFN and details when making this call.
What can you do if you are owed super?
The ATO can help! You can use the online tool to let the ATO know your employer hasn’t met their super guarantee obligations. Use this tool to let them know your employer has, not paid your super, paid your super late or paid your super to the incorrect fund.
Super is a savings account for the future that earns interest! It is a great thing to keep in mind especially before the end of financial year to get another tax deduction in.