Superannuation (or super) is a fund specifically designed to help you save and invest for your retirement.
It’s restricted as you generally can’t withdraw from super until you retire or reach your preservation age (that’s the intention, although there are special conditions of release).
And super funds are set up as trust funds. This means a trustee is appointed to manage the fund on behalf, and for the benefit, of its members.
Super receives special tax treatment compared to your other money. When it comes to investing over the long term, there aren’t many better tax-effective ways to save for your retirement.
Lower taxes and more investment options – such as local and international shares, property and fixed interest investments – offer your super more potential to grow.
** Deposits into a super fund are called contributions.
Super opens your money to the world of investment markets and you can choose how it is invested.
Money in super is taxed in different ways to your other investments. It’s designed to reward you for investing for the long term.
Super offers competitive insurance. Your insurance premiums, which are part of your super contributions, may be paid from your pre-tax salary, which is a tax-effective way to enjoy the protection you and your family need.
The most common type of super is an accumulation fund, which is like a managed fund or investment. The main difference is the advantageous tax treatment on contributions and earnings which your money enjoys until you retire.
If you have a lot of assets and have the time, you may want to consider a self-managed super fund to take control of your super.
Deposits into super are known as ‘contributions’.
There are two types of contributions. They can be made from your:
Generally, concessional contributions (made from pre-tax income) attract a contributions tax of 15% (or 30% if you earn over $300,000 pa), which can be significantly lower than your marginal tax rate. There is no contributions tax on non-concessional contributions (made from post-tax income).
However, there are caps on both these types of contributions which vary depending on your age.
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