Superannuation: regular payments made into a fund by an employee towards a future pension
What’s great about Superannuation?
It’s tax effective! The maximum tax you will pay in superannuation is 15%. So super can be a great vehicle for long term savings, particularly for your retirement.
What’s not great about Superannuation?
It’s locked up until you are near retirement age. It is also subject to governmental legislative changes.
What is the most common mistake with super?
The most common mistake made with superannuation is holding multiple policies. I have had new clients with up to 11 policies. This happens when small amounts of superannuation are paid by various workplaces over time. By having multiple policies you run the risk of paying multiple administration fees. Or even worse, losing it altogether. Also, most people don’t know how their savings are invested. The investment funds may not be getting the best outcomes for their circumstances and goals. Consolidating your supers can save thousands over your lifetime. The money that you save is better in your pocket than it is to give it away to the administrators of the fund in which you invest.
3 Super Tips:
- Make sure that you have no more than two super funds
- Beware of your super caps (breaching caps can be expensive)
- Know how your super is invested to get the best possible rates of return, consistent with your desired level of risk
Superannuation is likely to be your largest asset, outside of your lifetime income and your family home. Taking an interest in it from the start can mean saving a lot of money on tax. You can also make sure it is earning you a really comfortable retirement.
Read more about superannuation here:
This manual is written by Dover and is primarily aimed at financial planners. We have found it works just as well as an explanatory document for clients.