Terri Ramsey Beavers Many Australians learn a bit about super when we get our first job, and after that, it’s relegated to a distant spot in the back of our minds. However, the rules around super do change over the years. With legislation before parliament in 2021, there’s no better time to get caught up.
From the benefits of an SMSF accountant to the dangers of failing to monitor your super, here are six things Aussies need to know about superannuation in 2021.
1. Self-managed super funds are offering greater flexibility
Self-managed super funds (SMSFs) are already ideal for those who want to take more control over their investment options. However, they’re set to get even more flexible in the coming years. As of 2021, the Australian parliament is considering legislation that would, among other things, raise the number of allowable members for an SMSF fund from four to six.
If you have a large family, this may be just the flexibility you’ve been seeking. However, as with all things SMSF-related, we suggest discussing any changes you wish to make with a qualified accountant.
2. You should track your super contributions
If you’re an employee making more than $450 per month, your employer should be contributing at least 10% of your ordinary earnings (not including overtime) to your super fund. This isn’t a 10% dock of your pay – it’s 10% on top of your pay that goes directly into your retirement fund.
It’s a good idea to check your payslips to ensure your employer is paying the right amount. If you elect to contribute to your super fund directly from your pay and your employer has committed to match your contribution, make sure the payments add up. Mistakes can be made, and it’s better to catch them sooner rather than later.
3. You have options if an employer isn’t paying your super
If your employer isn’t meeting their super obligations and you’ve been unable to resolve the issue directly with them, there are places you can turn. Some super funds will offer you assistance in this matter, and either way, you can lodge an inquiry with the ATO.
4. Small contributions compound into a major investment
When you’re young, it’s easy to see retirement as some distant milestone that’s so far in the future it feels like it will never arrive. With this mindset, contributing even $10 a month to your super seems like a waste. However, if you don’t make any contributions, your future self will be in a far less comfortable position. It’s worth playing around with a compound interest calculator to see how much of a difference a few bucks can make when they’re invested early in life.
5. You don’t have to wait until retirement to use your super
While it’s generally advisable to leave your super be (for reasons that will become clear if you spend some time with a compound interest calculator), there are some occasions where you can access it early. Most notable is the First Home Super Saver Scheme (FHSSS) which was recently introduced by the government.
However, bear in mind that you’re not really taking from your retirement fund when you use this scheme. The idea is for you to save for your first home within your super fund where you can take advantage of the tax concessions and healthy returns.
Though the rules and best practices around super will continue to evolve as society progresses, you’re now caught up with the state of things in 2021.