Superannuation is the Australian Government’s answer to creating a sustainable retirement strategy for our growing population.
To encourage us to grow our retirement nest egg, the Government has made Super a very attractive place to invest our money.
Although retirement might seem like it’s a world away, here are some reasons millions of Australians contribute to Superannuation.
It’s Compulsory
If you are over 18 and earning more than $450 per month as an employee (e.g. you receive a salary), your employer must contribute to a super fund which you nominate. If you don’t choose a fund, they still need to contribute to a fund. This means, it’s a guaranteed savings plan.
If you are under 18, working more than 30 hours a week and earning more than $450 a month, your employer must pay super. Refer to the ATO’s website for more details.
Self-employed people, including contractors and freelancers, can also make super contributions.
Taxes and Fees
Super funds are generally taxed at a lower rate than other investments and have low fees. For example, super funds pay tax at 15%, while the highest income tax rate is over 45%!
While lower fees and tax might appear to be just small differences now, lower taxes and fees may mean your money can grow faster over many years.
Simple and Diversified
Super funds typically invest your money in a range of assets like shares, property, bonds, cash and alternative assets. This means it is simple to get exposure to a range of financial markets. Check your superannuation statement and look for your ‘asset allocation’ and risk profile.
Insurance
Finally, your super fund may own insurance on your behalf, meaning you can provide some cover for your family or loved ones without paying the premiums from your pocket. Speak to your adviser about the benefits and drawbacks of paying for insurance inside super.
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