Superannuation Explained
What is Superannuation?
Your superannuation fund is a pool of money designed to provide for your retirement. If invested wisely it could allow you to be financially independent in retirement.
The ‘Superannuation Guarantee’ (SG) for salary and wage earners was introduced in July 1992 by the Keating Labor government. The government realised that as our population ages, there will be less tax paying workers to support retirees who rely on Centrelink benefits to fund their retirement. Therefore something had to be done to reduce the public’s reliance on the social welfare system. The ‘Superannuation Guarantee’ was introduced as a solution to the problem posed by the ageing population.
A percentage of your pre-tax salary is automatically paid by your employer to your superannuation fund to accumulate for retirement. You can also contribute further to your superannuation by means of concessional contributions (pre-tax or receive a tax concession) and non-concessional contributions (after tax) to boost your retirement savings. It is estimated that SG contributions alone will not be enough for many Australians to maintain their lifestyle throughout retirement. Therefore many Australians opt to contribute further to their superannuation, especially as they approach retirement.
Your superannuation savings are not accessible until you meet a ‘condition of release’. Besides a few exceptions, to satisfy a condition of release you must have either retired from the workforce after reaching your preservation age (dependent on your date of birth, currently 55), stop working after age 60, or reach the age of 65.
Once you satisfy a condition of release you can withdraw your superannuation as a lump sum, or commence a superannuation income stream or pension.
For more information on superannuation continue reading the education articles. More detailed information and strategies available to boost your retirement savings will be available soon…
Disclaimer: Before making any decisions which may effect your superannuation savings you should seek qualified, independent financial advice to ensure the superannuation product or strategy is appropriate for you based on your financial needs, goals and objectives.