The Australian government, like governments in comparable countries, is moving away from the notion that retired people should live on taxpayer-funded pensions. Requiring all working Australians to have their own retirement savings plan places the responsibility on the individual rather than the community as a whole. Employers are required to pay 9.5% of the eligible employee’s salary into a complying super fund, such as EquitySuper fund and its products, EquitySuper Investment Engine and EquitySuper Super Focus.
FREQUENTLY ASKED QUESTIONS
- Why is super required by law?
- Who receives superannuation?
- I'm already an EquitySuper member. Can my new employer pay in for me?
- I have multiple super accounts. Can I consolidate them?
- What is salary sacrifice?
- If I salary sacrifice into super, how will my contributions be taxed?
- What happens if I exceed the limit on before-tax contributions?
- Can I withdraw my super before I retire?
- When can I retire?
- When am I considered 'retired'?
- What is my preservation age?
- Do I have access to any of my super at any time?
- What is 'transition to retirement'?
- What if I forget about money in an old super fund?
- Why is Tax File Number notification important?
- What happens to super in a separation or divorce settlement?
- What happens to my super if I die?
- 1: Why is super required by law?
- 2: Who receives superannuation?
The 9.5%* SG contribution must generally be paid for any employee who earns $450 (gross) per month or more. Employees are defined as individuals who receive payment in the form of a salary or wage, in return for their labour or services. This includes directors or persons contracting wholly or principally for labour (even if their ABN is quoted). The minimum SG contribution is currently calculated at 9.5% of the employee's earnings base. Where no other applicable earnings base is used for SG purposes, Ordinary Time Earnings is the default earnings base. Ordinary Time Earnings do not include:
- Overtime payments
- Top up payments
- Payment in lieu of notice
- Maternity leave payments
- Workers' compensation payments where no work is performed
- Annual leave loading
- Reimbursement of expenses
- Lump sum payments for accrued annual or long service leave paid on termination of employment. From 1st July 2008 employers will need to be aware that the minimum SG contributions will have to be based on Ordinary Time Earnings, rather than any other earnings base previously used (see the ATO website).
*The 9.25% SG contribution was increased to 9.5% as at 1 July 2014.
- 3: I'm already an EquitySuper member. Can my new employer pay in for me?
Yes. They can either join up as a participating employer member (it’s free) or they can pay a once-off contribution. Ask them to call us on 1300 659 799 and we’ll walk them through the options.
- 4: I have multiple super accounts. Can I consolidate them?
Yes. In fact, you will most likely save money on fees if you consolidate your accounts. Simply request or download a Super Consolidation form, complete it and return it to EquitySuper, Reply Paid Box 398, North Sydney NSW 2059.
Note most Superannuation Providers have additional requirements for transfers (e.g. certified proof of identity documents). You may contact your other Superannuation Provider to determine these requirements, or they will contact you after receiving the Super Consolidation form.
- 5: What is salary sacrifice?
A superannuation salary sacrifice agreement is a voluntary arrangement between you and your employer whereby you agree to contractually reduce your wage in return for higher employer superannuation contributions. Such agreements are generally designed to enable you to take advantage of the concessional taxation treatment of employer superannuation contributions.
- 6: If I salary sacrifice into super, how will my contributions be taxed?
Salary sacrificed contributions are indistinguishable from any other employer contribution and are taxed at the flat 15%, so they are a great way to boost your super in a tax effective way.
- 7: What happens if I exceed the limit on before-tax contributions?
The ATO will monitor all contributions made on your behalf. If your before-tax contributions exceed $50,000 in a financial year you will be notified by the ATO. The excess contributions will be taxed at the top marginal rate plus the Medicare levy.
- 8: Can I withdraw my super before I retire?
Generally speaking, superannuation is preserved until you retire, meaning that you can't access it until that time. However, some people may have part of their account classed as unrestricted non-preserved, meaning that it may be withdrawn at any time. Any restricted non-preserved portion may be withdrawn when employment is terminated. Your superannuation statement will show if you have any non-preserved monies in your account.
In other limited circumstances you may be allowed to withdraw some of your preserved superannuation.
- 9: When can I retire?
You can retire at any age you wish, it will usually depend on whether you have the funds to afford it. Generally, you don't have access to money in superannuation investments until you at least reach your 'preservation age' and have retired.
- 10: When am I considered 'retired'?
You are currently considered retired if:
- from your preservation age – you are not employed (working less than 10 hours per week is permissible) and do not intend to resume full-time work in the future;
- from age 60 – you stop working; or
- from age 65 – whether you are employed or not.
- 11: What is my preservation age?
Your preservation age (i.e. the age at which you generally have access to preserved money in superannuation investments) depends on when you were born.
Date of birth
Before 1 July 1960
1 July 1960 - 30 June 1961
1 July 1961 - 30 June 1962
1 July 1962 - 30 June 1963
1 July 1963 - 30 June 1964
After 1 July 1964
For further information, please contact us on 1300 659 799 or via email to firstname.lastname@example.org
- 12: Do I have access to any of my super at any time?
All superannuation contributions made after 30 June 1999, are preserved. This means they must remain in the superannuation system and you cannot withdraw them until you have retired and reached your preservation age. From 1 July 2005, when you reach your preservation age you can take an income stream (pension). However no part of that income stream can be included in or taken as a lump sum.
If you made personal contributions before 30th June 1999, and did not claim them as a tax deduction, you can withdraw these contributions after you leave the employer you were with when you made the contribution.
- 13: What is 'transition to retirement'?
From 1 July 2005, new Australian Government rules gave you more options in making the transition from work to retirement. If you have reached your preservation age but have not permanently retired, subject to the rules of your fund, you will be able to continue working part-time and use part of your super to supplement your income.
Under these rules, you will have to receive that part of your super as a particular type of pension (income stream).
These pensions, known as ‘complying’ pensions and ‘allocated’ pensions, will generally not be ‘commutable’. Broadly speaking, this means you won’t be able to stop the pension and cash it out as a lump sum.
If you select a ‘non-commutable’ allocated pension, you will be allowed to take a lump sum once you retire or reach age 65. Or you can stop the pension and put your benefits back into your super fund; for example, if you decide to go back to full-time work.
For more information about transition to retirement and the importance of planning ahead, talk to a Financial Adviser.
- 14: What if I forget about money in an old super fund?
You may forget about it altogether, but don't ever make this mistake! Where members lose touch with their super provider, their balance may be transferred into a special fund called an Eligible Rollover Fund (ERF). If the ERF has not established contact with you by your 65th birthday, your money will be transferred to the relevant government body.
To track down your super money, a good starting point is to gather up any superannuation statements you have. If these don’t seem to cover all the years you’ve worked, give your old employers a call and ask where they’ve paid your super. Another option is to contact the Tax Office and search their databases for any super that may have been reported to them as lost. You can call them on 13 10 20 or visit www.ato.gov.au. To help you find your lost super we would suggest you start at Super Seeker.
Once we know where your super is, we can help you arrange to transfer your other funds into your EquitySuper Fund account. All you need to do is complete a Super Consolidation form for each fund, send it to us and we’ll contact the other fund and organise the transfer for you.
Often the fund that you are leaving will ask for proof of your identity before they will transfer your account to EquitySuper Fund. Generally, this will be something like a certified copy of your driver’s licence or your passport, or some other document that independently verifies your identity. Having a copy certified means a JP (or someone similar) has seen the original and signed the photocopy verifying that it is a true and complete copy of the original.
Make sure you check any exit fees or changes to your insurance cover before you close any accounts.
- 15: Why is Tax File Number notification important?
Tax File Numbers are important and allow the ATO to identify member’s contributions, to calculate taxes and to identify lost super.
From July 1st 2007 those members that have not provided their super fund with their Tax File Number (TFN) will be taxed on the highest marginal rate for all before-tax contributions. So don’t delay. EquitySuper members can check their statement to see if they have already provided their TFN.
- 16: What happens to super in a separation or divorce settlement?
Amendments to the Family Law Act and Regulations ('Family Law Act') mean that married couples now have the option of splitting their super entitlements on separation or divorce.
Our information brochure, Family Law Information, provides a brief summary of the changes to the Family Law Act that applies to super and covers how to request the super information from your EquitySuper Fund. You should also consider seeking advice from an appropriately qualified legal practitioner and/or financial adviser. Contact an Adviser.
- 17: What happens to my super if I die?
If you die with an EquitySuper Fund account balance, it will be paid to your eligible beneficiaries. The Trustee will look at your personal circumstances, including the beneficiary that you have nominated, and determine to whom the benefit should be paid.
It’s important to keep your beneficiary nomination current and update it whenever your personal circumstances change, for example if you marry or have children.
You can update your beneficiary nomination by completing a Death Benefit Beneficiary Nomination Form.