Superannuation, or ‘super’, is a system where employers contribute a percentage of your salary into a super fund to support your financial needs in retirement. You also have the option to contribute money under limited circumstances. There are strict annual limits as to how much can be contributed annually. Super is a crucial part of planning for your future by ensuring you have enough money to live comfortably when you retire.
Super can only be accessed under very strict circumstances such as when you retire or reach preservation age, turn 65 years old, transition to retirement, severe financial hardship, compassionate grounds, terminal medical condition or permanent incapacity.
Super funds can be industry funds or self-managed. Whichever fund you have you should be actively reviewing at least on an annual basis to ensure the fund is performing and growing at the rate you require. You may choose to seek the assistance of a Financial Advisor to manage your super or you can work directly with your fund managers.
Superannuation falls outside of your Will, and you should ensure you have completed a Binding Death Nomination (BDN) to nominate who receives your super benefits upon your death, either a dependant or your Legal Personal Representative (LPR). These BDN can be lapsing, or non-lapsing and it is extremely important that you have made one.
Without a BDN the fund trustee determines who receives your benefits based on the super fund rules. The trustee can only pay your super to eligible beneficiaries which generally includes your spouse, children or anyone financially dependent on you. The absence of a BDN can lead to delays in distributions on death, disputes or estate complications.
How are contributions made?
- Employer Contributions: Your employer is required to regularly pay a set percentage of your earnings into your super fund. This is known as ‘super guarantee contributions’.
- Personal Contributions: You can also add your own money to your super fund under certain circumstances and within annual limits.
- Government Co- Contributions: Under certain circumstances and strict criteria, the Australian Government may also co contribute to your super.
A garden doesn’t grow without water, so to your Super won’t grow if you don’t actively contribute, manage, review and actively understand it. Reach out to us if you have any questions, on 07 5494 9173.
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