Whether you are looking to choose or change a super fund, compare your options or just understand the fund you’re with, there are some essential things you should know.
The basics of super in Australia
In Australia, if you are over 18 years of age, earn more than $450 a month and are regarded as an employee for tax purposes, your employer must pay money into a super account in your name. This is called Superannuation Guarantee and every employer is legally bound to contribute 9.5% of an employee’s total earnings (including commissions, loadings and any other allowances) directly into the employee’s super account.
The amount employers need to pay is on the rise. In 2021, the minimum contribution will be increased to 10%, and from then on the percentage will continue to rise by 0.5% a year until it reaches 12% in 2025 (Source: ATO).
Your super fund
In most cases, you’ll be able to choose your own super fund, but there may be times when you’ll be required to use a specified fund (eg if your fund is specified by an industrial agreement or if you work in public sector). Your employer will need to let you know when that’s the case.
Each super fund has standards that must be met. You can see whether a fund is compliant using the Australian government’s Super Fund Lookup service. When you’re looking to find out specific information about a fund you should look in three places. The first is the fund’s website, the next is by contacting them directly, and finally, you can review the product disclosure statement (PDS).
When you select a fund, there are five areas you should review to make sure it’s going to meet your needs:
Fees: How much the fund will charge you in management fees
Investment options: Where and how the money is going to be invested by your fund
Performance: How well the fund has been investing, and what kind of return have members been receiving
Insurance: Which insurance options are available to you through the fund. Common options include life insurance and income protection insurance
Extras: Anything extra that this fund might offer. For example, an industry fund may include benefits that are specific to your line of work
Talk to our team today about your retirement savings fund, to ensure you have the right structure in place for your future.