Making super work for you: 5 tips you can apply now
By Cynthia Fei, Senior Accountant
We all know that the super guarantee rate will increase to 10% from this July. For many employees like myself, on a remuneration package inclusive of super, the increase means a slight reduction in take-home pay. Although this isn’t too concerning, I’ve always believed in making the most of super as a vehicle for wealth creation and wanted to provide you with some tips to hopefully get more out of your super.
Whether you’re planning for early retirement or simply looking to save on fees, hopefully these quick tips help you in some way:
1. Search for lost super
There is over $20 billion worth of lost super in Australia as at 30 June 2019. You will be amazed how easy it is to search for any lost super you may have. You can search for your lost super online using myGov.
Many industry or retail super funds also provide the service of searching for lost super on their member portals.
You can read more about searching for lost super via the ATO here.
2. Combine your super accounts
Having more than one account means paying more fees. Combining your super into one account will save you money. If you know you have super with multiple funds, you can consolidate your super by completing the consolidation form online with your super fund.
After receiving your consolidation request, your super fund will do all the hard work for you.
3. Switch to a fund with better performance
When seeking the right fund for you there are many factors to consider. Although all the disclaimers state that “past performance is not an indicator of future performance,” many people like to consider how different funds have performed through varied market conditions in the past. Just don’t let this be your only deciding factor. I do like to consider long-term performance history in addition to how the fund has performed lately.
Other deciding factors may include the fees charged by different funds, and – increasingly – what sort of assets they invest in, e.g. some consumers are increasingly interested in ethical investment funds. Ultimately you may want to consider your priorities and goals right now, and evaluate whether you are well served by your current fund.
I switched my super fund several years ago and the whole process was simple and easy. You may wish to consider doing the same if your super fund isn’t right for you.
There are also handy tools you can use to find the latest data on super funds, like this super fund comparison website from Canstar.
4. Government super co-contribution
Super co-contribution is a good way to boost your super balance. If you make non-concessional personal contributions of $1,000 to your super account, the maximum co-contribution you can receive is $500. As the co-contribution is means tested, many average salary earners do not meet the eligibility requirement. But it might be available to your child who has started their first job, or your spouse who works part-time.
You can read more about super co-contribution via the ATO here.
5. Contribute more to your super fund
From 1 July 2017, the requirement that you derive less than 10% of your income from employment sources has been abolished and – regardless of your employment arrangement – you may be able to claim a tax deduction for your personal super contribution if you are under 67. This means, if you want to make more concessional super contributions, you don’t need to reach a salary sacrifice agreement with your employer.
You can simply make concessional contributions to your super fund whenever you like (i.e. when you sell your investment property or earn a bonus).
If you want to claim a deduction for your super contribution, don’t forget to give your super fund a notice of intent to claim a deduction for personal contributions prior to the lodgement of your personal tax return.
Super is one of our most important financial assets. It is in our best interest to make sure that it works hard for us. I hope these tips have helped get you thinking about your own super situation!
Contact us with any questions you may have about your super; with an in-house wealth management team led by Mark Copsey, we can assist you with all aspects.
IMPORTANT NOTICE
This blog post contains general information only and has been prepared by Allworths without reference to your objectives, financial situation or needs. Allworths cannot guarantee the accuracy, completeness or timeliness of the information contained here. By making this information available to you, we are not providing professional advice or recommendations. Before acting on any of the information contained here, you should seek professional advice.
