Understanding Australia’s Superannuation System

Superannuation is the most common form of retirement savings for most Aussies.

This has been actively encouraged and promoted by the government through the introduction of the Superannuation Guarantee Charge (more commonly known as the SGC) back in July of 1992 by the Keating Administration . The introduction of this legislation forced employers to set aside a percentage most employee’s wages and pay it each quarter to a complying superannuation fund.  This percentage now sits at 9% with some lobbying for an increase of up to 12%.

The purpose of superannuation is to provide private funding for an individual’s retirement; instead of having to rely on a Centrelink Pension.

You have a few choices about how to save for retirement and there’s several different ways, including:

– SGC contributions (paid by your employer)

– Salary sacrifice (putting more into your super in pre-tax dollars instead of taking it home)

– Government co-contribution (a top up from the Government subject to certain rules)

– Personal deductible contributions (mostly utilised by the self employed market)

– Non-concessional contributions (where no tax deductions apply)

Each of these contributions fits into a specific category, namely:

1.  Concessional Contributions (where a tax deduction will be claimed) or

2.  Non-Concessional Contributions (where no tax deduction will be claimed.)

You might remember them from previous super statements as ‘Taxable’ and ‘Non-Taxable,’ which was probably a little more self explanatory.  There are very distinct differences between the two which will be discussed in more detail in coming posts…

Amanda is the Adviser Director of Wealth Planning Partners. She is passionate about assisting her clients with The WPP Way, helping them Secure, Build and Succeed financially. She is Gold Coast based, but loves travelling domestically and internationally.

Posted in Finances, Investments, Self Managed Superannuation Funds, Superannuation Tagged with: , , , , , , ,

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