Superannuation
Australian Superannuation - Basic Structure
A superannuation fund is
a trust that can be a self managed fund, a public offer fund or a
Retirement Savings Account. The fund invests money on your behalf and re-invests investment earnings
net of tax and charges
to increase the benefit you receive on retirement.
Employers within Australia are generally required to contribute to superannuation for all their employees. The current rate of contribution is 9% of salary or wages excluding overtime - these contributions are called the "Superannuation Guarantee contributions". These
payments, when received by the superannuation fund, are subject to tax at the rate of 15%. The tax is paid by the superannuation fund to the Government. Employees also having the option of also adding their own contributions, although from July 1, 2005 they may opt to put them in a separate, external fund. Some funds in fact require contributions from employees, and others may provide for employers to match additional contributions by employees.
There is no theoretical limit on the amount of superannuation you can have. However, there are "reasonable benefit limits" (RBL's) which restrict the amount of concessionally taxed superannuation you can receive in your lifetime. Amounts over RBL limits can be subject to quite severe levels of taxation - the highest marginal rate (currently 48.5%).
If you are self employed,
contributions to superannuation are voluntary. You can claim deductions for contributions made to a complying superannuation fund or retirement savings account (RSA), but the rules can differ depending on your business structure. The deductions allowable are capped by age based limits - effectively allowing larger deductions as individuals approach retirement age. "Complying" superannuation funds include "self-managed" superannuation funds, or DIY Funds as they are called. These will be addressed later, as they pose some particular issues for Australians becoming non-resident.
All superannuation contributions made from 1 July 1999 must, with very few strict exceptions, be "preserved" in the superannuation system until you permanently retire from the workforce and reach the minimum age set by law (see the table below).
Your date of birth and
Minimum age for accessing superannuation:
- after June 1964 :
60
- July 1963-June 1964 :
59
- July 1962-June 1963 :
58
- July 1961-June 1962 :
57
- July 1960-June 1961 :
56
- before July 1960 :
55
Most funds can pay a benefit to your dependents,
non dependants or your estate,
when you die. Superannuation funds may also offer insurance in case you have to give up working because of illness or disability. Some funds may also offer other benefits and features, for example payments if you are retrenched or made redundant.
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Created by PiXEL iNK MEDiA