4 Super Easy Tips
Superannuation can be a complex area, but by doing a few simple things, you can help ensure you make the most of your super and avoid some pitfalls along the way. What you do now, may make all the difference to your finances in the short term and your retirement in the future.
- The power of one super account
If you’ve had several jobs over the years, chances are you have a number of different super accounts. Multiple super accounts mean multiple fees, which eat into your retirement savings over time. By having all your super in one place, you not only save on fees and grow your super, it’s a lot easier to keep track of.
Before moving your super you should consider: any fees payable (e.g. for exit or withdrawal), where future employer contributions will be paid; the effect it may have on any insurance cover within your super and whether current insurance entitlements will be retained or equivalent cover made available and any other possible impact, e.g. to your investments and tax position.
- Take advantage of super incentives
If you can afford it, consider salary sacrificing. This is where you make additional contributions to your super fund pre-tax. Salary sacrificing can help boost your retirement nest egg and at the same time, reduce your income tax. A welcome double benefit.
- Stay within your contribution limits
When it comes to the maximum amount you can contribute to your super fund each year, there are two types of limits: concessional and non-concessional limits. It may pay to stay within these limits, otherwise you could end up with an unwanted and unnecessary tax bill.
For the 2015/16 financial year:
- Concessional limits put a yearly cap on the amount of concessional contributions you can contribute to your super fund without incurring extra tax. The general cap is $30,000 but If you’re turning 50 or older in this financial year it’s $35,000. These limits include the amount your employer already pays into your super account.
Concessional contributions include certain contributions your employer makes on your behalf into your super fund that have not yet been taxed, such as compulsory employer SG and salary sacrifice; and personal contributions you make to your super fund for which you can claim a tax deduction, such as contributions you make if you are self-employed.
Sometimes these contributions are referred to as ‘before tax contributions’. These amounts are included in the assessable income of the super fund, and are taxed at your super fund’s tax rate.
- Non-concessional limits put a cap on the amount of non-concessional contributions you can add to your super fund without potentially incurring extra tax. This cap is currently $180,000 a year for members 65 or over but under 75. If you’re under 65 you may be able to contribute up to $540,000 over a rolling three-year period.
Non concessional contributions include certain contributions that you, or your employer makes on your behalf, from your after-tax income, sometimes referred to as ‘after-tax contributions’, which are not included in the accessible income of your superannuation fund. These include personal contributions for which a tax deduction is not intended to be claimed. Non-concessional contributions also include spouse contributions.
These limits change from year to year and it’s important to check the ATO’s web site to ensure your contributions are within the limits.
- Nominate a beneficiary
Super is one of your biggest assets. If anything unforeseen happens to you and it becomes part of your estate, it could help you to have peace of mind that it will be distributed as you wish. Generally, If you don’t nominate a beneficiary, the trustees will decide who receives your super.
Make a non-binding nomination
A non-binding nomination, acts more like a guide to who should receive your super. Normally, your beneficiary would be your dependant or your estate.
Make a binding lapsing nomination
With a binding nomination, your wishes must be followed. As this nomination lapses after three years, it’s important to update it every three years (or as your circumstances change).
Make a non-lapsing nomination
If you don’t want the hassle of reviewing your binding-nomination every 3 years, you can make a non-lapsing nomination. Of course you can always change your beneficiaries should you need to at any time.
Like some more tips?
For more easy tips to help simplify and make the most of your super visit www.suncorp.com.au/super/making-contributions.