Superannuation (“super”) is a compulsory system of setting aside a percentage of your income into a super fund during your working life. This can be a combination of superannuation guarantee (SG) contributions made by your employer and any voluntary contributions you make. It’s done to support your future financial needs in retirement.
Here are some guidelines on how to take control of your super and make the most of it.
Get acquainted with your super
Your super builds up when you start work. The money deposited into your super account is invested on your behalf by a trustee from your super fund. Investments can be made into assets (cash deposits, property, or shares) depending on your specific choice or default investment profile. Your super balance grows as your investments generate returns.
It’s better to get acquainted with your super now than worry about it until retirement. The sooner you do, the more you could grow your retirement nest egg effectively.
Is your employer paying your super?
It’s important to check if the SG contributions made by your employer are being paid correctly. If you’re over 18 years old and earning $450 or more a month, the amount of super should be at least 9.5% of your ordinary earnings. Your pay slips should show the amount being paid into your super account.
SG contributions only have to be paid quarterly, so those super payments recorded on your pay slips will show up in your fund in a few months. To see exactly what has been paid in, check your super fund statements or login to your super account.
Extra tax will be taken out of your SG contributions if you have not provided your super fund with your tax file number.
You may also have to pay extra tax if you contribute more than the caps. Contribution caps apply to contributions made to your super in a financial year.
In case there’s a problem with your SG contributions, follow up with your employer, inform your super fund, or contact the Australian Tax Office (ATO).
Find your lost super
When you lose track of your super, your super fund loses track of you. This could happen when you change jobs and forget to roll over what you’ve accumulated previously. If you wish to maintain your existing super fund, ask your employer and fill out necessary forms.
Forgetting to update your details with your super fund when you move house is another common reason your super gets lost. Lost super is so common in Australia — all of that money is waiting to be claimed.
Find your lost or unclaimed super by doing a search with your super fund or by logging into your MyGov ATO account.
Consolidate your super
Around 40% of the 14.8 million Australians with super have more than one account. It is easier to keep track of your overall balance when you consolidate your super.
Make sure to know whether you’ll risk losing features and benefits that may be attached to the account you’re closing. You might be charged exit or withdrawal fees if you decide to consolidate.
It is also better as you pay just one set of fees and save money in insurance premiums if you have insurance cover through several super funds.
Check the insurance cover in your super
A super account may include a range of personal insurance options. These are paid for from your account balance. The types of insurance cover generally offered by super funds are life insurance, income protection, and total and permanent disability.
Insurance through super are often cheaper than personal insurance bought separately. This is because super funds purchase insurance policies in bulk. Also, they are usually available minus health checks.
Log in to your account or contact your super fund to review the insurance options available. Consider whether the insurance cover doubles up on anything you have outside of your super fund. You may be able to adjust or cancel your cover accordingly.
It’s worth checking that the insurance suits your needs which may change throughout your life.
Take Control And Make The Most Of Your Superannuation Click To TweetUpdate your beneficiaries details
Your super may last 20 years or more when you retire, it may even outlive you. It’s important to notify your super fund where you want your money to go when you’re gone.
By nominating a beneficiary, your super can be distributed in the event of your death. Let your super fund know your choice of beneficiary and keep the details up-to-date in case there are changes in your circumstances. There are two types of beneficiary nominations you can make:
- Binding nomination — With a binding nomination, your super fund is required to pay your benefit to the person or people you’ve nominated. The nomination has to be valid at the time of your death. Although you cannot always make binding nominations and usually, it only remains valid for three years.
- Non-binding nomination — With a non-binding nomination, your super fund will have to make a decision on who to pay your death benefit to. Generally, these are people who are financially dependent on you.
Review your investment options
Most super funds allow you to choose where and how to invest your super. In general, the investment options vary depending on the level of risk you’re willing to take on. The common practice when you’re younger is to take on higher risk investments with potentially higher returns. You can then change to more stable investment options with lower returns as you move closer to retirement.
Learn about your super fund’s investment options to know which investments are right for you. Contact your super funds directly or go online for the self-service options to change investments.
It’s worth reviewing your investment options regularly as the most appropriate option may change depending on the economy, your circumstances, and other factors. Stay on top of your super to have a better chance of building money for your future.
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If you’re still working and far from retirement, there may come a time when you need an emergency fund. Quick loans from Quickle can help you with your urgent needs by borrowing a small amount, based on the amount you’re typically paid in a pay period. There are no worries about borrowing too much as Quickle limits the amount to what you can afford to repay with it’s instant loans.
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