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How super works
The essential things you need to know about super.
What we will cover

What is super?

Choosing a super fund

Super contributions

Super investment options

Super fees

Insurance through super

Where to get more information
What is super?

Superannuation is a way to save for your retirement

The money comes from contributions made into your super fund

Your employer must pay 9.5% of your earnings into your super fund

Your money in super accumulates over time to give you a nest egg when you stop working
Choosing a super fund

Any extra benefits?

The lower the fees the better

An investment option for you

Performance over a 5-year period

Insurance you need

Good customer service
Super contributions

9.5% super guarantee

Extra super contributions:
o
After-tax contributions
o
Government co-contribution
o
Salary sacrificing
After-tax contributions

Deposit your personal money into your super account

Contributions from your after-tax income don't get taxed when your fund receives them because you
have already paid tax

There are limits
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Free money from the government

If you earn less than $50,454

Up to $500 per year, for $1,000 contributions

50% bonus immediately if your income is less than $35,454
Salary sacrificing

An agreement with your employer

Part of your salary is ‘sacrificed’ straight into super

Reduces your income

Increases your super

Can create a tax advantage
Case study: Crystal boosts her super by salary sacrificing
Crystal earns $90,000 before tax, excluding her employer's super contribution.
If Crystal decides to redirect $10,000 of her pay into salary sacrifice super contributions, she will save $2,400
in tax, with the money going into her super fund instead of her pocket.
Crystal's boost
Does nothing
Salary sacrifices $10,000
Take-home pay
$66,953
$60,853
Tax
$23,047
$19,147
Extra money into super
$0
$8,500
Net benefit
$66,953
$69,353 ($2,400 better off)
*Assumptions: The figures used in this table are estimates only and are based on 2014/2015 income tax rates
and a Medicare Levy of 2%.
Super investment options
Growth
Balanced
Conservative
Cash
Mix of investments
Mix of investments
Mix of investments
Mix of investments
Around 85% in shares
and listed property with
the rest in cash and fixed
interest
Around 70% in shares
and listed property with
the rest in cash and fixed
interest
Around 30% in shares
and listed property with
the rest in cash and fixed
interest
100% in deposits with
Australian deposit-taking
institutions
Which investment option?

You want your super to grow and to keep pace with inflation.

A growth or balanced strategy may suit you over the long term.

Historically, over any 20-year period, a growth or balanced strategy gives better returns than more
conservative investment options.
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Fees

A 1% difference in fees now could be a 20% difference in 30 years

Pick a fund that charges lower fees

Typical fees include:
o
ongoing administration fees
o
member fees
o
investment management fees
o
contribution fees
o
adviser service fees
o
insurance premiums
Insurance through super

Life cover

Total and permanent disability cover

Income protection
Benefits:

Can be cheaper

Tax advantage

Easy to manage
Where to get more info

Go to www.moneysmart.gov.au, where you can find lots of information, tools, calculators and booklets
to download or order

Ask your super fund directly, or go to their website

Ask your employer
Online calculators

Go to www.moneysmart.gov.au
o
Superannuation calculator
o
Super contributions optimiser
o
Super vs mortgage calculator
o
Employer contributions calculator
o
Career break super calculator
o
Retirement planner
Questions?
www.moneysmart.gov.au
© Australian Securities and Investments Commission
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