There’s no such thing as “too early” when it comes to most things, especially financial planning. After all, you can never be too sure about your future, so you should secure as much money as possible to ensure you have enough to afford those rainy day expenses and still live comfortably in retirement. In Australia, many people achieve this by investing in their superannuation fund.
According to Finder’s Consumer Sentiment Tracker, 69% of Australians have a superannuation fund and a further 6% plan on opening a super account in the future.1
A superannuation account, more commonly known as super, is a special investment account created to help you save for retirement. However, few people understand the basics of their super account and how it can be utilised to grow your retirement nest egg, which can lead to financial difficulties in old age. For this reason, this article will answer some of the most common questions regarding super accounts and contributions. Read on below to get started.
Super Accounts and Contributions
#1 – Which Superannuation Account Will Be Deemed “Stapled”?
It’s not unheard of for Australians to have more than one super account, in fact, 1 in 10 (10%) currently have more than 1 active fund.2 To clear the confusion, you can have more than one active super account, however, you can only have one account that is deemed as your official stapled super account.
If you commence work from 1 November 2021, your employer may request details of a ‘stapled super fund’ from the ATO. A stapled super fund is an existing super account that is linked to you as an employee so that it follows you as you change jobs.
To be a stapled super fund, you must be an existing member and the fund must be a:
- complying superannuation fund
- retirement savings account
- complying superannuation scheme.
Where you have multiple existing eligible super accounts, the ATO will apply ‘tiebreaker’ rules which consider:
- whether we have previously identified an account as a stapled super fund
- how recently contributions have been made to each of the accounts
- the account balances
- how recently each of the accounts were created.
It’s important to keep track of how many super accounts you have and the balance of these funds. Most people generally choose to maintain just one fund for simplicity and to keep their super account keeping fees to a minimum. By maintaining one account you also minimise the risk of one of your super funds being classified as an inactive low-balance account transferred to the ATO under the Protecting Your Superannuation Package Legislation.3
#2 – What If I Don’t Have a Superannuation Fund?
If you don’t have a super account, you’ll need to take steps to get one for yourself. From 1 July 2022, you’ll be entitled to receive super guarantee contributions regardless of how much you earn if you satisfy the eligibility requirements. If this is the first job where you are eligible to receive superannuation, your payroll may be able to point you in the direction of a fund you can join (e.g. an employer-sponsored super fund) or your financial adviser can help you to set up a personal super fund and help you to manage it as part of your overall wealth creation strategy.
Some important details to consider when choosing your super fund are:
- Account keeping and investment fees
- Potential additional fees
- Investment options
- Insurance options
- Suitability for your needs
Once your super account is set up, you need to ensure that you notify your payroll as soon as possible so that you can start to receive contributions. This is done by providing your payroll with a completed Superannuation Choice Nomination Form.
It’s important to note that under some employment agreements, you may not be able to choose which super fund receives your SG contributions and you may have to follow the choice of your employer.
If you do not make a choice and you do not have a stapled super fund that the ATO can confirm with your employer, then your employer can contribute to their nominated default fund for you.
#3 – Is It Possible to Change Superannuation Accounts?
There are many situations where people change their super fund. This might be because they switch to a new job whereby the employer-sponsored super fund is superior to their own, their adviser can offer a competitive retail super fund, their existing fund charges higher fees than other funds, or the investment choices in another fund is more suited to their investment preferences.
Changing your super fund can be a complicated decision as there are so many factors that need to be taken into consideration that can affect your final balance. If you do decide to rollover your super, you’ll need to transfer your existing balance to your new super account and also let your employer know your new super account details so that they can pay your SG contributions and any salary sacrifice contributions there from now on (which means a new Superannuation Choice Nomination Form).
Remember, under some employment agreements, you may not be able to choose which super fund receives your SG contributions and you may have to follow the choice of your employer so it’s important that you check this information with your payroll before making any decisions.
#4 – When can I Access My Super?
Generally, you must reach preservation age before you can access your superannuation per ATO rules. Here is a simple table to help you determine your preservation age.4
Recommended super balance required for a comfortable retirement
The best way to ensure you can save as much money as possible for retirement is to have a superannuation fund. Doing so will help you build a retirement nest egg during your working years so that you can independently fund a comfortable life after work.
Central Coast Financial Planning Group can help you with superannuation advice. Our team of financial experts will ensure that your money is invested in accordance with your needs and goals to help you secure your future, giving you peace of mind in retirement. Call us or book online to secure your complimentary first meeting with our advice team today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.