Facts About The Australian Super Fund

The Australian Super Fund is an employee contributory scheme allowing Australians to accumulate enough funds to cater for their old age living after retirement. The super funds are highly encouraged by the Australian government through tax benefits and setting minimum principles for the employee’s contribution and management of the funds.

Super Fund contributions

Both the employer and the employee contribute to the fund. An employer’s contribution, known as a Super guarantee, is at least 9.5% of the employee ordinary time incomes. This contribution will gradually increase to reach 12% in the near future. An employer can only contribute for employees of majority age earning more than $450 a month before tax. However, in case the employee is under 18 years old, earning more than $450 a month before tax, and works in excess of 30 hours a week, the employer has to remit such an employee’s super contribution. Though contribution for employees above 70 years old is at times rare, those who pass the work test and work for more than 40 hours during a month can make super fund contribution.

On top of employer contributions, a member can make additional contributions to their account. One way of increasing the accumulated amount is by adding some of your personal savings to the super account. In case you have more than one super fund contributions, you can regularly transfer these other funds to you main super account. Additionally, you can request the employer to make additional payment to your account by deducting the additional super contribution from your salary before taxation and paying the deducted amount to your account. The self-employed also enjoy tax deduction on their super fund contributions.

Accessing the funds

The Australian Super Fund aim is assisting the fund owner in their retirement age. Therefore, the funds are only accessible after retirement and on reaching the preservation age, which is the age at which you are legally allowed to withdraw your funds. Preservation age depends on the date of birth. Those born before July 1, 1960, have the age set at 55 while the same is at 56 for those born before 30 June 1961. The preservation age increases by one year from 1960 until July 1, 1964, beyond which the age stagnates at 60.

Once eligible, you can get the super fund in three ways. It can either be a lump sum, as a constant stream of retirement incomes or as a combination of these two. Interestingly, if you opt for an income stream, the remaining super fund continues to accumulate interests.

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