Confused by industry jargon? We help you make sense of it all…
We want to empower you to take control of your finances and own your tomorrow. But we know it’s not always easy. The language of finance can be complex and confusing.
Here we explain superannuation terms in everyday language.
Superannuation guarantee (SG)
The payments your employer makes into your super. All Australian employers are required to pay at least 9.5% into their employees’ super accounts. The SG rate is frozen until 30 June 2021, after which it is set to increase gradually to 12% by 1 July 2025.
Any payments into your super by your employer from your pre-tax salary (including super guarantee and salary sacrifice) up to $25,000 that are only taxed at 15%, which is lower than most people’s marginal tax rate —unless you earn over $250,000, in which case you’re taxed at 30%.
You can pay up to $100,000 a year into your super with after-tax funds—or $300,000 spread over three years. Although your payments won’t allow you to receive a tax deduction, non-concessional contributions can still be a tax-effective way of saving for retirement. Any earnings are only taxed at up to 15% and any withdrawals are tax-free once you can access your super.
Depending on how much you earn, if you top up your super using after-tax contributions, you may receive up to $500 from the government.
The people you want to receive your super savings in the event of your death. It’s important to remember that your will doesn’t cover your super. So if you don’t name your beneficiaries, your super fund may decide who gets your money after your death.
There are two types of beneficiaries binding and non-binding. Having a non-binding beneficiary will give the trustee an indication of how you would like your super distributed, however making a binding nomination is the only way to make sure your super savings will go to the right people at the right time because your super fund is legally obliged to follow your instructions.
It’s important to note binding nominations are only valid for three years so you need to keep them up to date.
Contact us we can help you make tax-effective contributions to your super and keep your beneficiaries up to date.
Important note: © AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.