Four quick tips to maximise your superannuation

From

Andrew Zbik

Four Corners recently televised an excellent report on the Australian Superannuation system.

The numbers are impressive. Australia now has the fourth largest pool of superannuation monies in the world topping just over $2.5 trillion dollars. Yet Australia ranks 53rd in the world for size of population. The pool of superannuation is more than what the entire Australian economy makes in one year.
The report highlighted some issues that need to be addressed regarding our superannuation system. The challenges of a more transient and part-time workforce, the inequality faced by women who leave work to raise children, how some retail funds are gouging fees due to disengaged superannuants.

This paints a bleak picture. I am not so bleak.

In my career I am now experiencing that Australians are taking their superannuation more seriously at a young age. In my early days, we would only talk to people over 50 about superannuation. Today, it is not uncommon that I am talking about superannuation with people in their late twenties and mid-thirties.

Here are four quick tips on how you can easily take care of your superannuation and maximise your long-term retirement savings:

1) Know how many superannuation funds you have

Make the effort to collate all your superannuation fund statements and figure out how many superannuation funds you have. Also have a look at what insurance you may have in each fund. Many funds may provide default life and Total & Permanent Disability cover. Some will also provide income protection cover.

2) Choose one superannuation fund, consolidate and then track it.

Next, you will need to choose one fund to keep as your main superannuation fund. If you are doing this yourself, Canstar provides some good research that tracks the top 10 performing superannuation funds in Australia.

Also think about what insurance you may need. There is a tax benefit in having your life and Total & Permanent Disability insurances owned in your superannuation fund.

Again, it’s a good idea to know how much you are paying in premiums. I am a very strong believer that if you are working you also need income protection insurance. If you don’t have enough cash flow personally to pay for an income protection policy this can also be owned by your superannuation fund.

These days, there is no excuse not knowing what your superannuation balance is. With budget tracking programs such as MyProsperity, it is possible to link your superannuation fund so that you can track the balance of your superannuation in real time.

Do the exercise of consolidating your superannuation once and do it properly.

3) Do you qualify for the Government Co-contribution?

If your income is under $51,813 you will qualify for the Government co-contribution. This is where if you make a $1,000 deposit from your personal bank account into your superannuation fund (called a non-concessional contribution) the Government will match it with up to $500. If your income is under $36,813 your $1,000 will be matched with the full $500. If you are earning between these two amounts, the contribution will reduce by three cents for every dollar earned over the bottom threshold. This is a really good way for part-time and casual workers to top up their superannuation.

4) Spouse contributions are a lot easier now

If you are earning under $40,000 you can also take advantage of the Spouse Contribution Tax Offset. This is where your spouse who is working can make a special contribution of up to $3,000 from their personal bank account to your superannuation fund. The benefit is they will get up to $540 as a tax offset. A tax offset is where their tax liability is reduced. Again, this is beneficially if you are working part time.

There are many other ways in which you can maximise your superannuation. The third and fourth tip above I think is particularly beneficial for mothers who have taken time off work to raise children.

By Andrew Zbik, Senior Financial Planner

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