Keep Check on your Superannuation - Some basic tips

[Guest Liam]

 

 

 

I am going to start posting some tips on different finance topics from now on. Here is the first one.

SUPERANNUATION:

It’s your responsibility to make sure you’re being paid your correct super entitlement. No one else is checking your super for you and missing out on contributions could adversely affect your retirement plans.

By law, your superannuation fund has to send you a member statement at least every 12 months. When you receive your next statement, look out for the following to make sure you’re getting your proper entitlement.

Your superannuation guarantee (SG)

Check that y our SG is being paid into your superannuation account at least quarterly.

To check that you’re getting the right amount of SG, you first need to know your ordinary time earnings (OTE). Your OTE is the amount you earn for your ordinary hours of work and generally includes your ordinary pay, over-award pay, shift loading and commission. A detailed list of what is included in OTE can be found at Australian Taxation Office Homepage. Your SG entitlement is nine per cent of your OTE.

 

Example: Barbara earns $1,200 a week before tax, or $15,600 per quarter ($1,200 x 13). She is entitled to $1,404 of SG contributions each quarter ($15,600 x 9%).

 

If you think you’re not being paid correctly, speak to your employer to find out why. If you’re not happy with the result you get from your employer, you can lodge an enquiry with the Australian Tax Office by phoning 13 10 20.

If you salary sacrifice

If you salary sacrifice, check what salary base your employer is using to calculate your SG. By law, an employer only has to base your SG entitlement on your reduced salary. In addition, the employer is able to count the salary sacrificed amounts as their SG obligation.

 

Example: Bill’s gross salary is $70,000. His SG entitlement is $6,300 per annum. He arranges with his employer to salary sacrifice $20,000. By law, Bill’s employer now only has to pay SG on $50,000 and what’s more, the employer can say that the $20,000 salary sacrificed amount covers the SG obligation and therefore he does not have to make any further contributions. Bill could therefore be missing out on $6,300 of SG contributions every year.

 

Check how often your salary sacrificed amounts are being contributed into your super fund. There is no law specifying how often your employer must pay salary sacrifice contributions into your fund so you could be missing out on investment returns if your salary sacrificed amounts are not being paid regularly.

 

If you think you are being disadvantaged because of a salary sacrifice arrangement you have in place with your employer, speak to your financial adviser to find out your options.

If you have insurance cover inside your super fund

Have a look at your insurance cover. Is it still appropriate? As you pay off your mortgage and your children become independent, you may be able to reduce your cover and therefore the cost of your insurance. If you’re not sure how much cover you need, speak to your financial adviser.

Your investment options

What are you invested in? If you’ve never made an investment selection, then you’re probably in a default option. Depending on your risk profile, this might not be appropriate and might affect the amount you’re expecting to get on retirement. We can help determine your risk profile and advise if your current investment option is appropriate.

Your beneficiaries

Have you completed a binding death benefit nomination within the past three years? If you haven’t and you die, the trustee of your estate will determine who will inherit your super savings. You should also ensure that an appropriate person has been nominated, as if the incorrect person is nominated, it could result in the nomination becoming invalid.

 

Hope these tIps are helpful

 

Liam