Advice Centre
Frequently Asked Questions
Financial Advice | Superannuation | Retirement | Investing | Insurance
Making sure you receive the correct amount of super
Am I eligible to receive the Super Guarantee (SG)?
If you are employed and earn at least $450 per month (before tax) and you are aged over 18 and under 70*, your employer is required to make regular superannuation contributions on your behalf equal to 9%** of your ordinary time earnings.
If you are under the age of 18 and work more than 30 hours a week, SG contributions are payable on ordinary time earnings in respect of that week provided the salary and wages paid over the calendar month exceed $450.
Your ordinary-time earnings are a component of your gross salary and include ordinary-time pay, shift allowances, commissions and some bonuses but not usually overtime payments.
So, if your ordinary-time earnings are $1,000 a month, your employer contribution to your super fund each month should be at least $90.
Income tax is not paid on the amount you receive as employer contributions. Instead, they are subject to the 15% Contributions Tax. This is deducted automatically by your superannuation fund.
While many employers pay super contributions into your fund on a regular basis, the law only requires that contributions be paid to the fund quarterly. If the employer fails to pay your contributions to your fund, you may not be notified of this or not become aware of it until the following year when your fund statement reflects zero contributions received.
*Employers are not required to make SG contributions for individuals once they reach 70 years of age. However, the Government plans to abolish this age limit.
**The 9% Superannuation Guarantee Contribution (SGC) is the minimum requirement established by law. Some Awards, Industrial Agreements or employment contracts may establish a higher contribution level than the SGC, but they cannot offer less.
How can I see how much super my employer has paid?
Super funds are obliged to send every member an annual statement of their super account. Some funds also send a half-yearly statement. This statement records your account balance at 1 July, your employer and your own contributions, investment earnings, fees and a year-end balance.
Employers must state on your pay slip how much super is paid and into which fund it is being directed. If you don’t have this last bit of important information, you should ask where your super money is going.
If you are concerned about whether your super contributions are being paid, talk to your employer to ensure he or she has your correct fund details. You can also check with your fund to determine what contributions have been received. Many funds offer website access to your account, which makes checking contributions received very easy.
Am I eligible for super if I am a contractor?
You are considered to be an ‘employee’ for Super Guarantee (SG) purposes as a contractor if:
- You are remunerated wholly or principally for your personal labour* and skills.
- You must perform the contractual work personally, and;
- You are paid by reference to hours worked, rather than for the amount of work performed.
The above applies even if you quote an Australian Business Number (ABN) in the course of payment for your services.
If in doubt whether you are an ‘employee’ for SG purposes, check with your super fund or the Australian Tax Office.
*Labour in this sense, does not mean just physical labour; it includes artistic and mental effort as well.
I don't think my employer is paying super into my account. What should I do?
If you’re concerned about unpaid Super Guarantee contributions you should:
- Make sure you’re eligible to receive the SG
- Check your super statement
- Talk to your employer, ask them how often they are paying and into which fund
- Call your super fund
If you have completed the above steps and still believe your employer is not paying enough or any super, and/or is not paying the super to your chosen fund, you can lodge an enquiry with the Australian Tax Office.
More about unpaid super (ATO website)
Contributing to your super
Why should I contribute to my super?
Making contributions to your super fund for yourself, in addition to the contributions your employer makes on your behalf can speed up the rate at which your superannuation grows. You don’t just benefit from the actual amounts you contribute; the annual earnings on the contributions you make mean that you earn compound interest on a larger amount year after year.
In addition, depending on which method of contributing is the most appropriate in your particular circumstances you may:
- Improve the value your wage or salary has for you, by improving your income tax situation and/or
- Be in a position to benefit from the Government’s superannuation co-contribution scheme, whereby the Government pays additional money into your superannuation account
How can I contribute to my super?
There are two methods of making additional contributions:
- Before-tax, e.g. employer + salary sacrificed contributions (technically referred to as ‘concessional contributions’)
- After-tax, (technically referred to as ‘non-concessional contributions’)
What type of contribution is best for you depends on your personal financial circumstances. Read more
How much can I contribute to super?
Before-tax / concessional contributions (employer + salary sacrificed contributions)
A cap of $25,000 a year generally applies to concessional contributions.
However, if you are over 50 at the end of one or more of the financial years 2009–10 to 2011–12 inclusive, a transitional cap of $50,000 applies for the relevant year(s). The transitional cap will revert to $25,000 from 1 July 2012 although it will be indexed.
Note: The Government has announced that the higher $50,000 cap will remain for people over 50 with less than $500,000 in super. They have also announced a freezing on indexation. However, these measures have yet to be legislated.
An employer, or in certain circumstances the contributor, can claim this type of contribution as a tax deduction. You pay 15% tax on these contributions through your super fund. Any contributions above these caps will be taxed at an additional 31.5%.
After-tax / non-concessional contributions
A cap of $150,000 a year generally applies to non-concessional contributions.
Up to and including the financial year that a person turns 64, ‘averaging’ provisions can be used. That means two years’ contributions can be brought forward to accommodate a larger one-off payment of up to $450,000 combined for a three-year period.
A person born on 1 July cannot use the ‘averaging’ provisions in the financial year they turn 65. If you are aged 65 to 74, a yearly contributions cap of $150,000 applies, provided you meet the work test.
This type of contribution comes from your after-tax pay. No tax deductions can be claimed on these amounts. Any contributions above these caps will be taxed at 46.5% (highest marginal tax rate + Medicare Levy).
The importance of Tax File Numbers
All fund members are required to supply their funds with a Tax File Number (TFN), which will be passed to the ATO. If you do not provide a TFN to the super fund, the earnings on your account can be taxed at 46.5%. Providing a TFN to your fund means that your employer’s contribution of deferred pay to your chosen super fund will be taxed at 15%.
Should I sacrifice more of my salary into super?
Superannuation is one of the most tax-effective ways of saving for retirement. It can be particularly attractive if you are on a higher marginal tax rate as these contributions are taxed at 15%.
Concessional contributions are made before tax is deducted, so salary sacrificing into super can reduce the income tax you pay. It may also reduce the money you receive to live on each payday – you are forgoing income now, for a higher retirement benefit later.
It is important to remember that:
- The additional payments you make are preserved or lock away until you meet one of the criteria for release ie. You reach retirement age: Current preservation ages
- There are also ‘caps’ to the amount you can contribute each year, based on your age. If you exceed these ‘caps’ the additional payments may be taxed at the highest marginal tax rate (46.5% including the Medicare levy): Current contributions caps
How does salary sacrifice work?
You can arrange for your employer to make additional pre-tax contributions for you. This can be a tax-effective way to increase your savings for retirement for people who earn $37,000 or more per year.
Example
Bill earns $80,000 a year and has living expenses of $50,000 a year. He is currently investing $11,250 into super as an after-tax contribution. He wants to know whether he can improve his retirement savings whilst still leaving $50,000 for his living expenses.
After speaking to his Financial Adviser, Bill goes to his employer and arranges to salary sacrifice additional contributions to his super fund. He requests additional contributions of $16,666 to be sacrificed to his super, which reduces his taxable income to $63,334.
| Current | After salary sacrifice | |
| Salary | $80,000 | $80,000 |
| Salary sacrifice into super | $0 | $16,666* |
| Taxable Income | $80,000 | $63,334 |
| Less Tax & Medicare | $18,750 | $13,334 |
| After-tax contribution to super | $11,250 | $0 |
| Net income for living expenses | $50,000 | $50,000 |
| Net tax benefit | N/A | $2,916 |
* 15% contributions tax is applied, which is $2,500.
The Outcome
- The tax savings above have been invested into Bill's super. Therefore, Bill is now contributing $14,166 net into super instead of $11,250.
- Bill has decreased his take home salary (and tax payable) and maintained sufficient income to meet his current living expenses.
- His increased contributions to his super account are in addition to the SG payments made by his employer.
Important Notes:
- The calculations above include the Medicare Levy but do not include the Flood Levy that is applicable in the 2011/12 financial year and applies to everyone who has a taxable income of $50,000 a year (unless they were directly impacted by the flood).
- Your employer may drop its SG contributions to your super fund based on your new lower salary. Therefore, it is important check with your employment agreement before proceeding with a salary sacrifice strategy.
Why don’t all employers allow salary sacrifice?
An employer may be constrained from offering salary sacrifice arrangements because of an award, or other policy reasons.
Salary sacrifice arrangements can add to the employer’s administrative costs, and if they are only going to be used by one or two employees the employer may be reluctant to commence an arrangement.
Am I eligible for a Government Co-contribution?
The Government pay co-contributions into your super fund if:
- you have made after-tax contributions to super during the previous financial year
- your assessable income plus reportable fringe benefits plus amount salary sacrificed into super is less than $61,920 p.a. (2011/12)
- you are less than 71 years of age and working at least part time
You do not need to tell your fund or the ATO that you have made your payment. The ATO cross-references your eligibility after you have submitted your tax return. If you qualify, the co-contribution is paid directly to your super account. Read more
Eligibility for the Government Co-contribution 2011/2012
| Income plus reportable fringe benefits ($) | Maximum co-contribution available ($) | After-tax contribution required to qualify for the maximum co-contribution ($) |
|
31,920 or less |
1,000 |
1,000 |
|
32,000 |
997 |
997 |
|
33,000 |
964 |
964 |
|
34,000 |
930 |
930 |
|
35,000 |
897 |
897 |
|
36,000 |
864 |
864 |
|
37,000 |
830 |
830 |
|
38,000 |
797 |
797 |
|
39,000 |
764 |
764 |
|
40,000 |
730 |
730 |
|
41,000 |
697 |
697 |
|
42,000 |
664 |
664 |
|
43,000 |
630 |
630 |
|
44,000 |
597 |
597 |
|
45,000 |
564 |
564 |
|
46,000 |
530 |
530 |
|
47,000 |
497 |
497 |
|
48,000 |
464 |
464 |
|
49,000 |
430 |
430 |
|
50,000 |
397 |
397 |
|
51,000 |
364 |
364 |
|
52,000 |
330 |
330 |
|
53,000 |
297 |
297 |
|
54,000 |
264 |
264 |
|
55,000 |
230 |
230 |
|
56,000 |
197 |
197 |
|
57,000 |
164 |
164 |
|
58,000 |
130 |
130 |
|
59,000 |
97 |
97 |
|
60,000 |
64 |
64 |
|
61,000 |
30 |
30 |
|
61,920 |
0 |
0 |
Note: The Government has announced a 50% reduction in the co-contribution from 2012/13.
I’m not working, can I contribute to super anyway?
The simple answer is yes, provided you are under 65.
However, you can contribute to super after reaching 65, if you are under 75 and meet the work test. The test involves you working at least 40 hours in 30 consecutive days during a financial year. The test must be undertaken before any contributions can be made.
These contributions are called non-concessional contributions and may come from your own savings or investments. They do not attract the 15% tax applicable to employer contributions, because tax has already been paid on them.
Please also note that there are contribution caps, which limit the amount of contributions you can make each year. Read more in the section 'How much can I contribute to super?' above.
Should I borrow to put money into super?
Before you borrow any money for any investment you should carefully consider how much interest you will pay, whether you can afford to pay it back and whether the costs of borrowing are exceeded by the expected return.
Borrowing money for investment is only worthwhile if the bottom line of the borrowing produces a higher investment return than the costs involved. You should also look at whether it is worth the strain on your budget. The same consideration applies to borrowing to put additional funds into super.
Moreover, you need to be aware that the interest on the cost of borrowing to put additional funds into super is not tax deductible. This is in contrast to borrowing for other forms of investment, such as buying shares or investment property, where the cost of borrowing may be tax deductible.
You may wish to borrow to put additional money into super in order to obtain the Federal Government’s co-contribution, which is available to low-and-middle income earners who put additional money into super. The most appropriate time to borrow is for a short period before you reach preservation age and are retiring. This is when you can repay the loan from a potential tax-free benefit you will receive from withdrawing a lump sum, or receiving an income stream – from your super fund– once you have turned 60.
If you are well below 60 years of age you need to assess carefully whether it is worth carrying extra debt to obtain the co-contribution, as you cannot access your super until you reach preservation age and can withdraw it tax free.
As a young person, should I contribute to super now?
If you begin making additional contributions to super early in your working life you may find it easier to grow your super than if you leave it until you are approaching retirement. Even modest additional contributions now can make a significant difference because you will benefit from the effect of compound interest over a longer time.
Try our 'What if I put more into super?' calculator to see the potential benefits of making extra contributions now.
As a young person, other major costs such as HECS/HELP/ SFSS repayments, car purchase, mortgage, children’s education, holidays and so on also require consideration. Speak to an Adviser about balancing your financial demands and achieve your goals.
Should I repay my mortgage before contributing to super?
This is one of many questions where individual circumstances may make a big difference to the most appropriate course of action.
Most people cannot claim a tax deduction for the interest they pay on the mortgage for their home, which is often their biggest monthly expense.
On the other hand, the tax savings from salary sacrificing may produce a better outcome than would be achieved by saving on mortgage payments.
Generally, it is often better to give first priority to repaying any debt that is not tax deductible. However, to assess this situation properly, individual calculations are required and individual circumstances need to be considered because there may be other financial factors that have a bearing on the most appropriate savings option. Speak to an Adviser about your situation.
Investments and Fees
How am I currently invested?
If you have never changed investment options within your superannuation account, you will be invested in your fund's default option, which is the option used for people who have never exercised investment choice.
You have the ability to change investment options at any time, however, a switching fee and buy/sell margins may apply. Industry superannuation funds generally do not charge a switching fee.
Why should I be concerned about super fees?
Fees affect your super in two ways:
- They directly reduce the amount of super in your account
- They reduce future earnings on your super account
It is important to understand how much you are paying in fees because super is generally a long-term investment and even small differences in fees can add up over the years.
On average, Industry Super Funds charge lower fees** than the average retail fund and have simpler fee structures. You can compare your fees with the fees charged by other funds to see the effect fees are having on your super balance at industrysuper.com
All funds are required to report the amount of fees that they have charged you, in dollar terms, on your annual statement.
Example
If you pay an extra 1% year in fees you could lose up to 20% from your retirement benefit over 30 years.*
Assuming an opening super balance of $50,000, an annual salary of $60,000 and an earning rate of 8% per year, then a management fee of 1% each year (ignoring all other fees) would result in a retirement benefit of $342,000 in 30 years, compared with only $286,000 if fees are 2% each year.
*Source: www.moneysmart.gov.au
**Industry Super Funds and lower fees: Based on an average of a sample of 16 Industry Super Funds and an average of a sample of 18 retail super funds (retail master trusts) as at 31 March 2010. Source: Research by SuperRatings, commissioned by Industry Fund Services Limited (IFS), ABN 54 007 016 195, AFSL 232514. Fees among individual funds vary and may change in the future.
What is the effect of compounding interest on my super contributions?
Compounding refers to the process whereby interest on earnings is applied not just to the original amount invested, but also progressively to the interest or earnings on that investment. Over many years, the effects of compounding can be substantial.
The earlier you start saving for retirement the longer compound interest can work in your favour.
The same principles cause fees to have a compounding impact on your final retirement payout. This is why the level of super fees you pay is an important consideration when choosing a super fund. Read more in the section above about fees.
Example
If an amount invested earned an annual interest rate of 8% and all of the earnings were re-invested every year, then the original amount would have almost doubled in nine years, would be almost four times greater in 18 years and almost eight times the original amount after 27 years.*
Of course, the final impact of compounding is affected by how long the investment is maintained, the amount of interest that investment earns and whether the interest is earned daily, monthly or yearly.
Amount: $50,000
Annual interest rate: 8%
| Years | Compounded Daily |
Compounded Monthly |
Compounded Yearly |
| 9 |
$102,714 | $102,477 |
$99,950 |
| 18 | $211,001 | $210,029 | $199,801 |
| 27 | $433,454 | $430,460 | $399,403 |
*Fees and taxes deducted from your super balance are not reflected in this calculation.
How can I tell if my super is working for me?
To see how your super fund and your investment choice(s) have performed, look at your latest annual statement or the fund website. If you have access to your account online, you will be able to view the most up to date results.
The return is often shown as a percentage figure, and the media regularly refers to these figures when making comparisons between funds.
Your statement or online account will mention what type of investment choice you have made, and you can find tables of super fund performance at Super Ratings and Selecting Super to help determine how your current super investments are performing in relation to other funds. If you rely on the percentage figure in your statement, you must be comfortable that all fees and taxes are included.
Choice of super fund
Can I take my super with me when I change jobs?
Yes, in most cases you can choose the fund your employer makes your SG contributions into. Read more in the section below.
What is fund choice?
Many employees are able to choose the super fund into which their SG contributions are paid, unless:
- Your super is paid under a state award or industrial agreement
- Your super is paid under certain workplace agreements, including an Australian Workplace Agreement (AWA) and enterprise or collective agreements (although you may also be able to choose your fund under these awards or agreements)
- You are a federal or state public sector employee excluded from choice by law or regulations
- You are in a particular type of defined-benefit fund or you have already reached a maximum benefit in that defined-benefit scheme
If you are not sure what award or industrial agreement, if any, you are covered by, you can contact Fair Work Australia on 1300 799 675.
See if you are eligible to choose your fund (ATOs website)
How do I choose a fund?
There are different types of super funds, but they can generally be divided into three groups:
- Industry superannuation funds, which are typically run only to benefit members and, on average, have lower fees* than commercial or retail superannuation funds.
- Employer-run funds (Corporate funds), which are often subsidised by the employer.
- Retail superannuation funds, which, on average, charge higher fees than the average Industry Super Fund.
When choosing a super fund, it is important to ensure you choose a fund that meets your needs. Some of the factors you should consider are:
- Has the fund performed well over the long term?
- What fees am I charged?
- Does the fund pay commissions to financial advisers?
- Does the fund offer a range of investment options?
- Is the life insurance and disability cover competitively priced?
- Can the fund help me with decisions about my super?
If you are eligible to choose a fund, your employer should give you a Standard Choice Form within 28 days of you starting work with that employer. The Standard Choice Form sets out your options for choosing a super fund. Read more (ATO's website)
*Industry Super Funds and lower fees: Based on an average of a sample of 16 Industry Super Funds and an average of a sample of 18 retail super funds (retail master trusts) as at 31 March 2010. Source: Research by SuperRatings, commissioned by Industry Fund Services Limited (IFS), ABN 54 007 016 195, AFSL 232514. Fees among individual funds vary and may change in the future.
What is the difference between an industry fund and a retail fund?
Industry funds are run only to benefit members, have low fees* and don't pay commissions to financial advisers. There is an industry fund for every type of worker, and many funds accept workers from any industry.
See a list of Industry Fund Service's shareholder funds for a selection of industry funds.
Retail funds are 'for-profit' super funds mostly owned and operated by large financial service providers such as banks, insurance companies and investment houses. Retail funds seek to make a profit from their activity and may also pay commissions to financial advisers for recommending their services. They are generally more expensive than industry funds but they may offer more investment choices.
*Industry Super Funds and lower fees: Based on an average of a sample of 16 Industry Super Funds and an average of a sample of 18 retail super funds (retail master trusts) as at 31 March 2010. Source: Research by SuperRatings, commissioned by Industry Fund Services Limited (IFS), ABN 54 007 016 195, AFSL 232514. Fees among individual funds vary and may change in the future.
Accessing Super
When can I access my super? (Preservation Age)
Members who have attained Preservation Age (see below) and continue to work and do not establish a non-commutable* income stream can only access their superannuation when they:
- Retire permanently from the workforce; or
- Have reached 60 years of age and cease employment with one employer (they do not have to retire permanently*); or
- Reach 65 years of age, regardless of their employment status.
Preservation Age is related to a member’s date of birth, as follows:
| Date of Birth | Preservation Age |
| Before 1/7/1960 | 55 |
| From 1/7/1960 to 30/6/1961 | 56 |
| From 1/7/1961 to 30/6/1962 | 57 |
| From 1/7/1962 to 30/6/1963 | 58 |
| From 1/7/1963 to 30/6/1964 | 59 |
| On or after 1/7/1964 | 60 |
The only exceptions to the preservation rules are when a person meets certain tests and is either:
- Declared totally and permanently disabled, in which case the full benefit is released; or
- Qualifies for limited access to their superannuation benefit on compassionate grounds or grounds of severe financial hardship.
- Where a member, age 60 or more, is in two or more employment arrangements at the same time, the cessation of one of the employment arrangements is the condition of release in respect of all preserved benefits accumulated up until that time.
*Non-commutable simply means that you can not withdraw a lump sum from the account while you are still working.
I have reached preservation age and am still working – can I access my super?
You may be able to access your super under the Government’s Transition to Retirement (TTR) provisions. Read more about TTR
Is there an age when benefits must be taken?
No. You can keep your benefits in your super accumulation fund indefinitely, taking as little or as much of their benefits as you choose.
However, by rolling over your benefits to a super income stream, all earnings within the fund become tax fee. This is opposed to leaving the funds in the accumulation side of superannuation and having earnings within the fund taxed up to a rate of 15%.
How can I access my super before retirement?
Super is invested for your retirement and therefore early access is highly restricted:
- If you have any unrestricted non-preserved benefits these can be accessed at any time.
- You can access what are called preserved lump sum benefits – the bulk of your super – when you reach preservation age on the condition that you retire. A preserved benefit refers to benefits built up after 1983 from employer contributions and any of your own contributions since 1999.
- If you have reached preservation age and are still working you can also sacrifice salary into your super fund and draw down an income stream (Transition to Retirement) from your super to top up your reduced take-home pay. This may provide a tax advantage.
- If you face an emergency, you may be able to access up to $10,000 of lump sum preserved benefits before preservation age. However, you must first satisfy a strict test - you must have been in receipt of a Commonwealth income support payment for at least a continuous 26-week period and still be in receipt of it at the time of application. You will need a letter from Centrelink or the Department of Veterans' Affairs to confirm this. You must also satisfy the trustee of the fund that you are unable to meet reasonable living expenses.
- There are also compassionate grounds for early release, for example the need for money to pay for home modifications because you have become disabled or if you are suffering from a terminal illness. A considerable amount of documentation is required. Applications for release on compassionate grounds must be referred to the Australian Prudential Regulation Authority (APRA).
Note: Promoters who promise early access to super should be shunned as you are likely to have to pay tax at the highest rate on the withdrawal as well as penalties.
If I face financial hardship can I access my superannuation?
The government has strict rules that govern the release of superannuation money on the basis of financial hardship.
The financial hardship provision is intended to permit the release of superannuation to relieve an immediate difficulty. The threshold rule for accessing super in this circumstance is the requirement that the applicant has been in receipt of a Government income support payment continuously for the previous 26 weeks and is still in receipt of the payment at the time of application.
Generally, when a financial hardship claim is accepted only a portion of the superannuation benefit is released to cover the immediate difficulty. Members not yet preservation age pay a superannuation withdrawal tax of up to 21.5% on the taxable component of any lump sum released as a financial hardship benefit.
I am leaving Australia permanently. Can I withdraw my super?
Generally no, unless you entered Australia as a temporary resident and have since departed.
More information for temporary residents leaving Australia is available on the ATO's website.
Tax on super
What tax do I pay on super?
Super is a tax effective way to save for retirement. Some quick tax facts based on 2011/12 tax rates:
- There is a 15% tax on pre-tax contributions (the top marginal tax rate outside super is 45% + Medicare Levy*).
- There is no tax payable on after-tax contributions (since you have already paid tax on that income).
- There is a 15% tax payable on income generated inside the super fund (i.e. earnings from the investment returns)
- There is no tax payable on the earnings once a fund has been converted to a super income stream.
- Upon retirement, people who are age 60 or over can access their super savings tax-free.
*In 2011/12 there will be an additional Flood Levy applied:
- An additional 0.5% to be applied on that part of an individual’s income between $50,001 and $100,000.
- An additional 1.0% to be applied on that part of the taxpayer’s taxable income above $100,000.
- Anyone earning less than $50,000 will not pay the levy.
- People affected by the floods will not pay the levy.
What is contributions tax?
A 15% contributions tax applies on employer contributions (including salary sacrifice) and is deducted from member super accounts.
Personal after-tax contributions and Government Co-contributions are not subject to contributions tax.
Self-employed members may claim a tax deduction on certain contributions, but those contributions are then subject to 15% tax and may affect any tax on the end benefit if drawn before age 60.
Why do I pay contributions tax?
You will be liable for contributions tax if you, your employer, or another party make concessional contributions to your superannuation account. The 15% contributions tax is lower than most individual’s marginal tax rate – most people are on a marginal tax rate of 31.5% (including Medicare) or higher.
The only way to avoid paying contributions tax is to make non-concessional contributions to your account. Non-concessional contributions are those contributions which are made from after-tax earnings, and for which no tax deduction can be claimed.
Do I have to pay tax on my super benefits once I reach preservation age?
Your superannuation benefits will most likely contain a tax-free and taxable component (your super fund can provide you with more details). The tax-free component (if any) and the taxable component of a super lump sum must be made in the relevant proportions of each, reflecting the proportional components of the total value of the super account, i.e. if your benefit is made up of a 20% tax free component and a 80% taxable component then all withdrawals must be taken in that proportion.
- The tax-free component can be taken tax-free regardless of age (subject to superannuation preservation rules)
- The taxable component if taken after the age of 60 is tax-free
- The taxable component if taken between preservation age and age 59 is taxed as follows:
- 0% to the low rate cap amount (currently $160,000 for 2010/11)
- Up to 15% (plus Medicare) on the balance
Note: This assumes all superannuation benefits are from a taxed source. If from an untaxed source, different rates will apply. As the above can be complex, we recommend speaking to a Financial Adviser.
Lost Super
How does super become 'lost'?
It is estimated that one in two Australians have lost a super account. That represents approximately $18 billion in unclaimed super waiting to be found.
Super accounts often become ‘lost’ if your fund loses contact with you. Some of the most common reasons for this are:
- Changed jobs (and moved to new fund with your new employer)
- Had more than one job at the one time (and super was being paid into different accounts by your employers)
- Moved house (and forgot to update your address with the fund)
- Changed your name (marriage, divorce etc)
- Worked in Australia as a temporary resident and since left Australia
If the fund is unable to contact you as they do not have a current address (mail is returned to them) or they have not received a contribution in the past five years, they may roll your super benefits over to an Eligible Rollover Fund (ERF). Read more in the section below.
What is an Eligible Rollover Fund (ERF)?
ERF’s are set up to hold lost and unclaimed super accounts and to try to find and reunite members with their super.
They do not offer choice of investment (your money will be invested in a default option). ERF’s usually don’t offer insurance cover and often have limitations on the types of contributions that can be made to the fund e.g. they won’t accept regular SG contributions from an employer.
If you have received mail or statements from a fund you believe is an ERF, you should contact them directly to discuss your options or to arrange to the transfer the account into your fund of choice.
What happens to 'lost' super?
Super funds may transfer small and inactive super accounts to an Eligible Rollover Fund (ERF).
With more than 1.5 million accounts and $500 million in funds under management, AUSfund – Australia’s Unclaimed Super Fund, is one of the largest ERF’s in the country.
AUSfund actively tries to find members and reunite them with their lost super. However, while they are managing the money, they continue to invest it in their default option which has a good track record for returns and lows fees.
Search for your lost super with AUSfund - It's quick and free. If AUSfund is holding any funds for you, they will help you to reclaim it and transfer it back to your fund of choice, at no charge.
How can I find my lost super?
Search for your lost super at AUSfund - it's quick, easy and free – initially you only have to provide your name and date of birth.
With more than 1.5 million accounts and $500 million in funds under management, AUSfund is one of the largest Eligible Rollover Funds in Australia. If AUSfund is holding any funds for you, they will help you to reclaim it and transfer it back to your fund of choice, at no charge.
Why should I roll my lost super into an active super fund account?
Eligible Rollover Fund's (ERF’s) were set up to hold lost and unclaimed accounts and to try to find and reunite members with their super. Although they provide basic super services, the benefits of rolling your 'lost' super into your active super account (which your employer makes contributions into) may include:
- Save on administration fees – if you have more than one super account, you will be paying more than one set of administration fees
- All your super in one place – easier to keep track of
- Less paperwork
- Access to extra services from your active super fund such as insurance, choice of investment etc. (ERF's generally don't offer this)
Account balance under $200: If your balance is less than $200, you may be able claim it as a cash payment.
Temporary residents leaving Australia: If you are a temporary resident and you do not claim your benefit within six months of the date you depart from Australia, the fund is required by law to transfer the amount to the Australian Taxation Office (ATO). If you wish to claim your benefit after the six months, you may do so at any time by applying directly to the ATO: Superannuation information for temporary residents departing Australia (ATO website)
If I don’t have an active super fund, how do I reclaim my lost super?
If you do not know if you have another super account, please check with you current or previous employer about which fund(s) they made super contributions to on your behalf.
For more information on why it may be better to roll out of an Eligible Rollover Fund (ERF) see section above.
I was a temporary resident and have since left Australia - how can I claim my (lost) super?
Firstly, contact your super fund to see if they still hold your super on your behalf.
If you do not claim your benefit within six months of the date you depart from Australia, the fund is required by law to transfer the amount to the Australian Taxation Office (ATO).
If you wish to claim your benefit after the six months, you may do so at any time by applying directly to the ATO: Superannuation information for temporary residents departing Australia (ATO website)
Can I claim my lost super as cash?
Superannuation funds are normally preserved until you reach retirement age, however, there are limited situations where you may be able to claim cash benefits:
Read more about when you can access your super (retirement and other personal circumstances).
General information about Super
I have several super accounts, how can I combine them?
Every super account you have is costing you fees. The more accounts you have, the more fees you pay. Consolidating will, in most cases, save you money and make it easier to keep track of your superannuation.
To consolidate all or some of your super accounts into one, you may use our consolidation service - a no cost option to help make this process easier for you.
What is superannuation splitting?
Superannuation splitting allows you to share your superannuation with your spouse. Read more
Can I borrow against my superannuation investment?
No. Superannuation cannot be used as collateral/security for a loan.
Can my fund accept UK pension transfers?
If you have a UK pension you can now transfer it to Australia. The UK will tax the funds differently depending on whether the Australian super fund is a Qualifying Recognised Overseas Pension Scheme (more commonly referred to as a QROPS).
Some Industry Super Funds are QROPS funds. You can check the list of QROPS available on the HMRC website (updated monthly) or call your fund.
Transfers to a QROPS
No tax is applied when transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS) and the benefits do not exceed the individual’s available lifetime allowance (£1,800,000 in 2010). Any amount transferred that exceeds the available lifetime allowance will be subject to tax at 25%.
Transfers to a non-QROPS
Where transferring to an overseas pension scheme that does not qualify as a QROPS, the member is subject to an unauthorised payments charge of 40% and may pay an additional surcharge of 15%.
Depending on the size of the unauthorised payment, additional fees and charges may also apply. Given the potential impact of these taxes, it may be beneficial for a member to remain in the UK pension scheme rather than transfer to a non-QROPS.
There may also be additional tax payable when funds are received in Australia by your Australian super fund, depending on when funds are transferred and the amount. Some of the transfers may also impact on your super contribution limits. It may be helpful to contact your super fund or speak to a Financial Adviser.
How safe is my super?
Your super is held in ‘trust’ by your super fund, which is the ‘trustee’ of your money. This means the trustee must hold that money on your behalf and must always act in your best interests.
Superannuation is a highly regulated area. Super funds must comply with many laws and regulations when accepting and managing your money. There are two main regulators whose job it is to ensure that super funds comply with those laws - APRA and ASIC.
The Australian Prudential Regulation Authority (APRA) regulates the prudential aspects and requirements of the super industry. ‘Prudential’ in this context refers to the principles of safety, sound management and responsibility for holding members’ super, which are directed at safeguarding the assets of members’ super accounts.
The Australian Securities and Investments Commission (ASIC) regulates the consumer protection and market integrity aspects of super and ensures that super funds are not acting in a misleading or deceptive manner.
Super funds are also required to have detailed fraud management policies and procedures in place to ensure your super is always protected.
How do I lodge a complaint about my super?
If you have a complaint about any aspect of your super, including investment returns, fees, errors in your statement, confusion about your fund’s terms and conditions, or unreasonable delay in making disability payments, your should contact your fund in writing. You should clearly state the nature of the problem and ask for it to be resolved. The fund has 90 days to respond or resolve your issue. Most complaints are resolved by the fund’s trustees.
However, if your complaint remains unresolved, it may be referred to the Superannuation Complaints Tribunal (SCT).
The SCT can deal with complaints that involve:
- Errors in your statement
- A belief that a death benefit has been paid to the wrong person
- Unreasonable delays in the payment of a benefit
- Miscalculation of a benefit
- Refusal to approve a disability benefit claim
- Any mix up about terms and conditions of your super
Matters that are outside the tribunal’s jurisdiction include:
- Disputes that have not been referred in writing to your fund’s trustee for resolution, and where 90 days has not elapsed.
- Complaints about the management of the fund as a whole, including investment performance, fees and charges.
- Decisions of some state government super funds.
- Complaints made about an employer, such as not receiving the 9% super contribution (these should be referred to the ATO).
- Any complaints about a life insurance product (but not the death benefit component of your super). These should be referred to the Financial Industry Complaints Service (FICS).
Complaints can be lodged online at the SCT website, where you can also download a copy of the complaint form. Or phone the SCT on 1300 780 808. Making a complaint to the SCT is free.
What happens to my super if I die?
If you die while a member of a super fund, the trustee must normally pay your life insurance benefit – the amount payable is typically your accumulated super savings plus insurance benefit – to one or more of your dependants, or your estate.
Dependants
See section about dependants under the Retirement FAQ section; the definition of a dependant is the same even if you are not retired at the time of your death.
Nominations
Most funds let you nominate who you want receive your death benefit, either as a ‘non-binding’ or ‘binding’ nomination:
- A non-binding nomination just guides the trustee, who still retains the final say in how your super is distributed and who tend to focus on who is dependent on you at the time of your death. The trustee is not required to follow the instructions in your will. eg. If you have dependants but nominate someone who doesn’t depend on you, the trustee may not follow your wishes.
- A binding nomination will direct the trustee to pay death benefits to one or more of your dependants or to your estate. A valid nomination is binding and does not leave any discretion to the trustee. Therefore, it may enable you to set up your estate plan with more certainty.
A binding direction must generally be updated at least every three years or it will lapse, although some funds will have a non-lapsing binding nomination that remains current until it is revoked or amended.
Note: It's important to keep these nominations up to date, especially if you marry, divorce, re-marry or have children.
Last updated on 19th March 2012
