The brochure will assist women in understanding the Australian Government’s superannuation initiatives (including the Better Super reforms) through effective communication of basic superannuation messages to women during their different life stages.
The topics in the brochure are often relevant to women under 40 years of age, such as: superannuation splitting; co-contributions; salary sacrificing; starting a new job; taking time off work to raise children; separation and divorce; planning for retirement; and finding lost superannuation.
Why is superannuation important?
How do you picture your retirement years? This brochure shows you how to make the most of your super. It aims to provide you with the knowledge to increase your super savings and work toward being financially secure in retirement.
What is superannuation?
Superannuation is an important way of saving so you can enjoy your retirement lifestyle.
Generally, if you are aged between 18 and 70 and are paid more than $450 (before tax) in a month, your employer must pay super on your behalf into a complying super fund.
This compulsory payment is called the superannuation guarantee.
Over your working life the money put into a super fund builds for your retirement. When you retire, your super is paid to you as either:
- a superannuation lump sum,
- a superannuation income stream, such as a pension or annuity, or
- a combination of both.
What happens when you start work or change jobs?
Starting a new job
Your employer must contribute a minimum of 9 per cent of your earnings for your ordinary hours of work into a super fund when you work either full-time, part-time, casually or as a contractor who is employed wholly or principally for labour.
It is important that you check your annual statement from your super fund each year so you have an accurate record of how much super is being contributed by your employer.
Choosing a super fund
Most employees can select their own super fund. However, you can also choose to go with a fund selected by your employer.
You might want to roll your existing super over into a new fund or you may want your new employer to pay their contributions into your existing fund. Be sure to explore your options carefully as some funds have a large exit penalty.
Give your super fund your tax file number
Make sure your fund has your tax file number (TFN). You can check this by looking at your member statement. If it isn’t quoted, contact your fund and provide your TFN.
This will help you keep track of your money and ensure you don’t pay extra tax on your contributions.
If your fund doesn’t have your TFN:
- your super may be taxed an additional 31.5%, and
- your fund won’t be able to accept personal contributions from you.
When you change jobs, be sure you keep track of your super. You can do this by:
- quoting your tax file number to your super fund,
- telling your super fund if you change address or your name,
- keeping all your super paperwork together,
- considering combining all your small super accounts, and
- finding any lost super you may have.
What are the benefits of making your own super contributions?
If you make personal super contributions, you can boost your super savings by obtaining the super co-contribution from the government. This is in addition to what you or your employer contribute.
Generally, you may be eligible for a super co-contribution of up to $1,500 a year if you:
- are either an employee or self-employed,
- earn less than a specified amount a year, and
- make after-tax contributions to your super fund before 30 June.
Don’t forget to make sure your super fund has your TFN, otherwise your fund can’t accept your personal contributions. If you are unable to make personal contributions to your fund you’ll miss out on receiving the super co-contribution.
To work out the super co-contribution you could be eligible to receive based on your income and personal super contributions, use the online calculator at www.ato.gov.au.
Salary sacrificing is an arrangement in which you can sacrifice your pre-tax income into a variety of benefits, including super.
When you salary sacrifice into super you can increase your super account whilst reducing your taxable income, which means you pay less tax.
Make sure that you are aware of all of the terms of your salary sacrificing agreement and that they are fully outlined and clearly documented.
You can obtain more information on the tax implications of salary sacrificing from the Tax Office or you may wish to discuss your salary sacrifice options with a financial adviser.
Are you taking time off work to raise children?
Your super doesn’t have to suffer if you take time off work to raise children. If you have a spouse, they can make contributions into your super fund. Spouse contributions currently receive an 18 per cent tax offset. The super contributions that your spouse puts into your fund will also be tax free when you withdraw them at retirement.
For your spouse to be eligible to claim the maximum tax offset, you must be earning $10,800 or less in a financial year. A reduced tax offset may be payable if you earn $13,800 or less in a financial year.
What happens if your marriage breaks down?
If your marriage breaks down, super is regarded like any other asset accumulated during your marriage and can be divided by agreement or court order. There may be tax consequences from dividing up super.
At this difficult time you may want to seek professional financial advice to ensure you make the right choices regarding your super as it will be important for your financial future.
Are you considering retirement?
If you are 60 or over and retired, the super benefits you receive will be tax free if you receive them from a taxed super fund.
This means when you receive a super lump sum or payments from a super income stream, you will not have tax deducted from these payments.
Transition to retirement
When you reach retirement age you may want to work part-time and use part of your super to supplement your income. Accessing your super through an income stream without having to retire permanently can ease you through the transition from work to retirement.
Check with your super fund to see whether they offer these income streams.
Finding your lost super
If you have changed jobs you may have lost track of your super.
To find your lost super you can:
- Conduct your own online SuperSeeker search by visiting www.ato.gov.au/superseeker, or
- phone 13 28 65 at any time.
You will need to provide your name, date of birth and tax file number to conduct your super search.
Once You’ve Found your lost Super
Once you’ve found your super, you may want to combine it all into one account. You can transfer your super from one fund to another using the Request to transfer whole balance of superannuation benefits between funds form (also known as the portability form), which is available from the Tax Office.
Where to get more information
- Visit www.ato.gov.au.
- Visit www.ofw.facsia.gov.au.
- For information on financial tips and safety checks visit the Australian Securities and Investments Commission website MoneySmart at www.moneysmart.gov.au or phone 1300 300 630.
- For copies of superannuation publications phone the Tax Office Publications Ordering service on 1300 720 092.
- To speak to a Tax Officer phone 13 10 20 between 8am and 6pm, Monday to Friday.
- Write to: Australian Taxation Office, PO Box 3578, Albury NSW 2640.
For more information about your super entitlements
Super - what you need to know (NAT 71039)
or Super and your retirement (NAT 71040).
You can request copies by phoning the Tax Office Publications Ordering service on 1300 720 092.