Superannuation Services 101

Superannuation services are headlines in business news lately because of the emergence of anomalies and the implementation of new rules for the super industry. The introduction of reforms and the proposals on transparent operations of superannuation funds are underway. Financial Services Council (FSC) Chief Executive John Brogden says that super funds should meet the same standards as the ASX-listed companies. “It's a simple proposition. We should meet the same standards as the companies we invest in,” he said. FSC’s proposed reform policy centres on the push for higher standards of governance in Australia’s $1.3 trillion super sector.

For those who have invested in this industry or are scheduled to meet a financial planner to discuss these investment services, but are still not well versed with superannuation, here is a quick list of the basics of this fund, from the Australian Government’s office, to help you start:

• Superannuation – money set aside over your lifetime to provide for your retirement, which will be invested in shares, property and managed funds

• Individuals superannuation – starts when you begin work and your employer pays super for you, known as super guarantee or concessional contributions

o Compulsory employer contributions

• Your employer pays at least 9% of your ordinary earnings (up to a maximum contribution base) to a complying super fund.

• You are entitled to choose the super fund where you want the contributions be paid into.

• Your employer continues to pay for your contributions even if they assign you to work overseas.

o Other contributions

• You make your own additional contributions to boost your super.

• Concessional (before-tax) contributions

o You can claim an income tax deduction.

o These contributions include super guarantee contribution by employer, salary sacrifice contributions and personal contributions you intend to claim as an income tax deduction.

o These contributions are taxed 15% in the super fund and 31.5% for the contributions in excess of the concessional contributions cap.

• Non-concessional (after-tax) contributions

o Your personal contributions made from your after-tax pay.

o These contributions are not taxed in the super fund, except for contributions in excess of the non-concessional contributions cap.

• Personal contributions

o Your voluntary contributions on top of your employer’s contributions.

o These are usually non-concessional contributions.

• Co-contributions

o You are eligible for co-contributions if you’re a low- or middle-income earner.

o The government will match or more than match your eligible personal contributions, up to a certain limit.

• Salary sacrificing super contributions

o You can ask your employer to have a portion of your salary paid into your super fund, instead of being paid to you.

o You can take advantage of the 15% tax on your super fund, which is probably less than the tax you would have paid if you took the money as salary.

• Self-managed super funds (SMSF) – you have control over your super investments for your retirement and are responsible for running it in accordance with the law and reporting to the Australian Taxation Office

If you’re interested in investing in SMSF, Ostrava Asset Management and Superannuation can help you through. They are specialists in SMSF and can assist you in formulating and executing an investment strategy for your fund. With Ostrava’s help, you don’t have to worry about the details and processes to ensure returns in your investment.