SUPERANNUATION

Superannuation is an investment structure, like a unit trust or company.

The ‘sole purpose' of super is a method of saving for retirement.

Advantages of Superannuation

The huge advantage of super is the significant tax concessions. Super is also an efficient environment to compound the growth of your investments.

Some of the great attractions of super currently are:

• Investments are taxed at 15% on entry (Compare this to your marginal tax rate - for most people this is 30% or 45% plus 1.5% Medicare Levy)
• There is a maximum tax on earnings of 15%
• Capital Gains are only taxed at 10%
• No tax on withdrawals once retired and over 60 years of age
• Deductible Contributions can offset Capital Gains Tax outside of super.

Other incentives include

• Co-Contribution
• Transition to Retirement
• Reasonable Benefit Limits (RBL) have been abolished from 1^st July 2007

(You will need to speak to a financial planner about how any of these may specifically affect you.)

Limitations of Superannuation

Contribution Limits restrict the amount that can be invested in superannuation.

For most people the following limitations usually apply:

• Concessional Contribution limit of $50,000 per annum
  • Super Guarantee Contribution (SGC)
  • Salary Sacrifice
• Non-Concessional Contribution limit of $150,000 per annum or $450,000 over a 3 year period

One thing is certain though - to gain the most benefit from super, you must start planning now.

Disadvantages of Superannuation

You cannot access your super until you have reached your preservation age and have permanently retired from the workforce. Some would argue that this is really another advantage.

Preservation Age

Why is the Federal Government offering such attractive incentives?

• Most people have not made adequate preparation for their retirement.

How much super is enough?

There is no straight ‘one size fits all” answer for this question. The best way to address this question is to look at:

• your health
• your life expectancy
• your investment strategy
• and what income you would require each year.

Contact us to see if you are on track to retire with sufficient funds in your superannuation.