How Do Super Funds Work?

Superannuation is one of the best ways to save money for your retirement, and has rules set by the government to manage how super is paid and the tax concessions available to make it an attractive retirement savings option. Superannuation funds pool your money with other members’ money and invest it for you. Generally, you can’t access or use this money until you retire.

Superannuation is made up of contributions from your employer/s over your working life, any money you add yourself, and sometimes the government will also make contributions on your behalf. You’ll also usually be covered automatically for a default level of death and total and permanent disability insurance through your super fund, unless you request to cancel this.

Most employers allow their employees to choose which super fund their money goes into. If you don’t make a choice, your employer will choose the fund for you (known as their default fund), however you can change this at any time..

Currently, employers must pay at least 9.5 percent of your salary (or ordinary time earnings) into your super fund. This amount will continue to grow over time, depending on the returns earned on the investments made by the fund on your behalf, and the earlier you start, the better off you will be when you retire.

As mentioned, you can also make additional contributions to your super fund yourself. You can deduct some of your money from each pay prior to taxes being taken out, so you may not even notice much of a difference, or contribute a small amount from your take-home pay each pay period – every little bit counts!  The government will also contribute to your fund on your behalf if you earn less than $37,000 per year.

Once you have reached a certain age and have retired, you will be able to access the money in your super fund, to help you enjoy your later years.

Contact us to find out how you can boost your super savings for retirement.