Superannuation or ‘super’ is saving money for when you retire.
Although that might seem like a long way off, remember that it’s your money and your employer is required to start paying super on your behalf into account as soon as you earn over $450 per month.
How does it work?
Federal superannuation law requires that your employer makes contributions to your superannuation fund.
Once you are over 18 years of age and earning more than $450 per month, your employer is legally required to deposit an extra 9.25% of your wage (ordinary time earnings) into your superannuation fund.
It should be noted that there was a plan to increase the employer contribution from 9% to 12% over the coming years but the current Federal government has announced that it intends to defer (or freeze) these increases.
You can also make voluntary contributions from your pay or savings to increase your super.
Your money is invested by your super fund to make it grow over time.
Why is it important?
Without any super or savings, most working people would need to rely on the old age pension, which is completely inadequate for most people and does not provide a decent retirement for those who have worked their whole lives in either paid employment or unpaid work raising children. While there is likely to always be some kind of age pension, many people will want to have extra money to enjoy their retirement.
With a retirement age of around 65 years and Australia’s average life expectancy at about 80, there is 15 to 20 years where you will need to have some money saved up to live on.
What types of funds are there?
- Industry funds – run jointly by employers and unions solely to benefit their members;
- Retail funds – run by financial institutions for profit;
- Employer Stand-alone funds – run by one employer for their employees;
- Self-managed funds – run by an individual for him or herself.
Does everyone get superannuation?
To be eligible to receive superannuation contributions you must satisfy certain criteria:
- You must earn over $450 per calendar month;
- Be under the age of 70 years old;
- Be working full time, part time or casual;
- If you’re under 18 years of age you must also work a minimum 30 hours a week to get superannuation contributions. However some Awards and Enterprise Agreements may have superannuation entitlements included in them – regardless of the hours you work and what age you are; and
- Apprentices and trainees are also entitled to superannuation if they work more than 30 hours per week and earn more than $450 per month.
How do I get my money out of super?
You can access your super when you:
- reach your preservation age and retire;
- reach your preservation age and have begun a transition to retirement income stream; or
- are 65 years old (even if you have not retired).
You can also access super in some special circumstances:
- compassionate grounds;
- severe financial hardship;
- terminal medical condition;
- temporary incapacity;
- permanent incapacity;
- temporary residents leaving Australia permanently;
- super death benefits (inheriting super); or
- super less than $200.
You can also move your money from one super fund to another at any time.
You should always get financial advice, contact your Fund and check with Centrelink (as it may affect your payment(s)) before accessing your super or changing funds.
Boosting your superannuation
You can elect to make extra payments into super from your savings, or by deducting more from your pay.
Depending on your earnings and circumstances, you may also be eligible for the low income super contribution (LISC). The low income super contribution (LISC) is a government superannuation payment of up to $500 for the 2012-13 financial year to help low-income earners save for retirement. For more information about the LISC, go to the ATO website or your nominated super fund, which is REST in the case of most SDA members.
Regrettably, the current Federal Government also has announced plans to scrap axe this important assistance for low income earners.
The industry fund in retail
Superannuation provisions are commonly included in all SDA Enterprise Agreements and Awards (refer to your relevant Award or Enterprise Agreement to check your entitlement).
Most Enterprise Agreements negotiated by the SDA nominate the Retail Employees Superannuation Trust – REST – as the appropriate fund applicable for your employment or list it as a default fund.
REST is a not for profit industry fund.
Members in REST enjoy the benefits of being part of the largest superannuation fund in Australia.
REST offers you financial security in your retirement, competitive life insurance benefits for today, and a refreshing "members first" way of working.
SDA members are of course also welcome to contact the Branch for further advice and information.
I want to find out about my super…
The amount of money your employer pays into super should be shown on your pay slip.
Most super funds also have a website where you can login to view your account.
If you are not sure about which superannuation fund you are in, speak to the people at work who do your pay and they will have the information for you. If you are still unsure, SDA members can contact the Branch at any time for advice and assistance.
Please note that this is general information only. Before making any financial or investment decisions, the SDA recommends you consult a financial planner to take into account your particular investment objectives, financial situation and individual needs.