How to Make a Superannuation Contribution

It’s important to start saving for your retirement as early as possible. Personal super contributions are what you contribute to your superannuation from your net salary or after-tax income. If you’re employed, these contributions are added to your super alongside from the compulsory super contributions from your employer.

In this article, find out how to make a superannuation contribution:

  • Make sure you have your Tax File Number (TFN) as your super fund needs it to accept your personal super contributions.
  • Remember the date: June 30 every year. Your personal contributions must be in your super fund so you can receive a government co-contribution for that financial year.
  • You don’t have to make your personal contributions at one time, you can make payments throughout the financial year. You can use a superannuation calculator to give you estimates on the amount of contributions.
  • Most funds provide several options to make a payment including direct debit, through your bank account and BPAY.
  • You can also make super contributions regularly into your super account from your net salary. However, if the contributions are from your before-tax salary, these are called salary-sacrificed contributions.

Relying on employer contributions alone will not be sufficient to keep your lifestyle up once you stop working.

The good thing is, there are ways to boost your super:

  • You can make concessional super contributions. If you are employed, you can discuss with your employer a portion of your pre-tax salary that can serve as an extra contribution, also called a salary sacrifice.  Concessional super contributions are limited to $25,000 per financial year, which means that the total salary sacrifice contributions must not be more than $25,000 annually.
  • You can also make non-concessional super contributions. All you have to do is deposit money directly into your super. Unlike the salary sacrifice where payment is done before your salary is taxed, the non-concessional contributions involve money where tax is already paid.
  • If your salary is less than $51,813 per year before tax and you make super contributions after tax, you can boost your super with government co-contributions. For every $1 contribution, the government will contribute 50c, and the maximum co-contribution is $500 if your salary is less than $36,813.
  • If you are self-employed or have varying work patterns, you can claim tax deductions from your personal after-tax super contributions.
  • If your salary is $37,000 or less, you may be eligible to get a low income superannuation tax offset of up to $500 every year from the government. This is the 15% of the concessional contributions from you or your employer during the financial year.

Do you have other ideas on superannuation in Australia? Share your insights in the comments section.

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Different Types of Super Funds

How much do you need to live comfortably upon retirement? When it comes to planning for retirement, you can ask an expert for superannuation advice so you can better understand the process. You can also use a superannuation calculator to give you an idea of the amount you need to contribute regularly for your super fund.

Retirement planning can be done as early as possible. There is a wide selection of super funds to choose from, so don’t be tempted to get the first one that you’ll see. Each type has its own features, and knowing your options can make the selection process easier. Here are the different categories of super funds:

MySuper

If you’re employed and you haven’t chosen your own super fund, your employer will pay contributions to your MySuper. It offers lower fees options when it comes to single or life stage investments, and life insurance on an opt-out basis. MySuper also has simple features wherein you don’t have to pay for services that you don’t need.

Retail funds

Banks and investment companies operate retail funds which offer a lot of investment options.  These are normally accumulation funds which can range from low-cost or MySuper up to high cost.

Industry funds

These are usually low to mid-cost funds, though some offer MySuper accounts. Unlike retail funds, industry funds have a smaller number of investment options. Most of these are accumulation funds. However, there are several older funds that have defined benefit members.

Self-managed super funds

For those wanting to manage their own superannuation, they usually do this via a self-managed super fund (SMSF). It is regulated by the Australian Taxation Office. This private super fund can have up to four members who are all trustees and are in-charge of making sure that the SMSF complies with laws associated with it.

Public sector funds

These are designed for employees of the departments of the Federal and State government.  This super fund offers low fees and a modest range of investment options. Some also offer MySuper accounts. New members of public sector funds are in an accumulation fund, while long-term members have defined benefits.

Corporate funds

Employers run corporate funds which offer a range of investment choices. These are usually low to mid-cost funds. Most members are into accumulation funds, while the older corporate funds come with defined benefit members.

Got other ideas on superannuation in Australia? Share your tips on retirement planning in the comments section. 

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