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Building Your Super

It’s all about setting up the future you want. Putting a little towards your super today, could mean a lot for you tomorrow. At the very least, you have your employer Superannuation Guarantee (SG) contributions, which are a great start for building your super for your retirement.

Every little bit helps

Pay yourself forward! Even small amounts that are set aside can make a huge difference over the long term.

A small amount could make a big difference. Find out more about how you can build your super below.

What type of lifestyle do you picture for yourself?

 

What does a comfortable retirement look like to you? Even if your ideal future changes every year, it’s worth thinking about it today so you can plan how much money you’ll need to maintain your preferred lifestyle.

For a rough idea, the Association of Superannuation Funds of Australia's Retirement Standard, states that for a 'comfortable' retirement,:

  • Single people will need $545,000 in retirement savings
  • Couples will need $640,000

What is the difference between a comfortable retirement lifestyle and a modest one? It depends on your definition. To help you think about it, we’ve pulled the following comparisons together.

  Comfortable Retirement Modest Retirement Age Pension
Travel One annual holiday in Australia One or two short breaks in Australia near where you live each year Even shorter breaks or day trips in your own city
Eating Out Regularly eat out at restaurants –good range and quality food Infrequently eat out at restaurants that have cheap food. Cheaper and less food than a 'comfortable' lifestyle standard Only club special meals or inexpensive takeaway
Car Owning a reasonable car Owning an older, less reliable car No car or, if you have a car, it will be a struggle to afford repairs
Clothes Good clothes Reasonable clothes Basic clothes
Leisure Activities Take part in a range of regular leisure activities Take part in one paid leisure activity infrequently. Some trips to the cinema Only taking part in no cost or very low cost leisure activities. Rare trips to the cinema
Private Health Insurance Private health insurance Private health insurance No private health insurance

Source: The Association of Superannuation Funds of Australia’s Retirement Standard

See how much you’ll have in retirement using our Retirement Simulator Calculator.

 

Making Contributions

There are several ways you can put money towards your super fund and save more for your future.

Employer Super Guarantee Contributions

 

If you are an eligible employee, your employer must pay your super on your behalf by law. These contributions are usually referred to as Superannuation Guarantee (SG) contributions.

Generally you’ll be considered an eligible employee if you are:

  • At least 18 years old;
  • Paid $450 (before tax) or more in a calendar month; and
  • A full-time, part-time or casual worker.

Here is what you need to know:

  • Typically, an SG contribution is 9.5% of your salary or your 'ordinary time earnings', including your benefits such as award payments, bonuses, commission and allowances.
  • They are paid "before tax" and therefore make up part of your Concessional Contribution Cap. Keep this in mind if you’re making additional contributions because there can be benefits and disadvantages with the amount you contribute each year.
  • Employers must pay these contributions on your behalf at least four times a year, by the quarterly due dates. It's a good idea to log in to your super once a quarter to make sure you’re receiving your payments from your employer. Missed payments have been known to happen so it pays to keep an eye on it.
 

Voluntary Contributions

 

You have the choice to top up your superannuation account with money out of your own pocket. This is called making a 'voluntary' or 'personal' contribution.

There are 3 types of voluntary (personal) contributions:
Salary Sacrifice

You can make contributions to super from your gross salary and be taxed at a lower rate of 15% for this contribution.

The 15% tax applies to the concessional contributions (include SG & Salary Sacrifice). You cannot claim the 15% tax benefit for amount over the cap in any one calendar year. Note: for people who earn over $300k they pay additional tax on SG and Salary Sacrifice contributions as part of their tax return process (changing to $250k on 1 July). More info on this in our fact sheet.

All you need to do is tell your employer how much of your gross salary you’d like to put into your super and how often, and they’ll arrange this to go alongside your salary payment.

Consider the Concessional Contribution Caps that are applicable to you.

Tax Deductible contribution

If you're not an employee (i.e. you’re self-employed) and get your income from sources other than as an employee you can make a contribution to your super from your personal money and claim a tax deduction at tax time.

This is the same as Salary Sacrificing, but you decide when you make the payment(s) and then claim back the tax benefit when you do your tax return.

Consider the Concessional Contribution Caps applicable to you. You may need to pay extra tax on amounts in excess of these caps.

After-Tax Contribution

Make a contribution to your super from your personal after-tax savings.

You do this if you have some extra money you’d like to put into your super. There is no additional tax claim you can make for this money, but of course it’s additional money in your super fund.

The current maximum non-concessional (after-tax) contribution cap is $180,000 for the 2016/17 financial year and applies to all ages.

Co-Contributions
Co-Contributions

If you earn less than $51,021 and you make an After-Tax contribution to your super (see After-Tax contribution), the Government will contribute up to 50c for every dollar you put in up to a maximum of $500 (the amount the Government contributes is dependent on your income).

All you need to do is make an After-Tax Contribution and, as long as your super fund holds your Tax File Number (TFN), your Co-Contribution will automatically be paid into your fund.

 

Salary Sacrifice

 

You can boost your super balance and potentially save on tax by contributing an extra amount of your salary to your super. This is called salary sacrificing. This will be taxed at a lower rate of 15% and contributes to your Concessional Contribution Cap.

All you need to do is ask your employer to pay some of your gross salary into your super fund—you decide how much. But remember there are contribution caps you need to keep in mind. If you go over these there could be additional tax you will be required to pay.

The maximum rate your super contributions from your employer (SG contributions) are taxed at is 15%, provided you don’t top the 'before tax contribution cap' for the year. That means any Salary Sacrifice contributions you make are deducted from your Taxable Income.

Just remember, superannuation contributions have to remain in a super fund until you meet a condition of release such as reaching 'preservation age' and may be subject to tax at time of exit. The 9.5% employer contribution may be impacted by your decision to make salary sacrifice contributions. A concessional contribution cap of $30,000 p.a. applies in 2016-2017 financial year.

Any salary sacrifice amount over the concessional contributions cap will be taxed at your income tax marginal rate. There is also an Excess Concessional Contributions charge (ECC). For more information, head to the ATO website. The scenario above is an example only, actual benefits may vary and will depend on individual circumstances.

 

Spouse Contributions

 

Let’s face it. Planning your future is more than planning for yourself. It’s also about your family. You can make super contributions for your spouse if they’re not employed or earn less than $13,800 p.a.

A spouse can be married or de-facto and there are possibly tax incentives available to those who are eligible.

You may even be entitled to a tax offset of up to $540 (maximum) each financial year if:

  • You do not claim a tax deduction for the contribution
  • At the time the contribution is made, both you and your spouse are Australian residents and live together on a permanent basis
  • The sum of the spouse's assessable income and total reportable fringe benefits amount for the financial year is less than $13,800
  • The contribution is made to a complying superannuation fund for the income year

Your personal circumstances will determine whether you end up paying less tax so check out the Australian Taxation Office (ATO) website for more information or discuss with your financial adviser.

Government Co-contributions

 

For those who are eligible, the Government Co-contribution initiative is a great way to build up your super. It’s done by making personal contributions from after-tax money. The income thresholds for the co-contribution are raised annually. Based on the figures that apply for 2016-2017, if you contribute money into super from your after-tax income and earn less than $51,021, you could be entitled to a co-contribution from the Government. Whether you are an employee or self-employed, this co-contribution could be as high as $500 ($1,000 of personal contributions and $500 in govt co-contribution). This is an annual opportunity so, providing you meet the criteria, you could receive it each year.

To be eligible you generally need to:

  • Make a personal (after-tax) contribution to your superannuation
  • Earn less than $51,021
  • Earn 10% or more of your income from carrying on a business, eligible employment or both
  • Lodge an income tax return for the year you have earned your income
  • Ensure your super fund has your tax file number
  • Be under 71 years old at the end of the financial year
  • you did not hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa)

If you’re eligible and your income is less than $36,021, you could receive $0.50 for every after-tax dollar you contribute to superannuation from the Government up to the maximum co-contribution of $500.

The co-contribution decreases by 3.33 cents for every dollar you earn over $36,021, reaching zero when you earn $51,021 each financial year. They are measured from your assessable income plus your fringe benefits.

Note: These income levels are for the 2016-17 financial year. The income thresholds are indexed annually.

Keep in mind that contribution annual caps can add up across different super accounts and types of contributions. So you need to keep an eye on your concessional and non-concessional contributions to avoid the top marginal tax rate and Medicare levy.

Consolidate

 

Get the most out of your super in the long term by consolidating your funds. Find out about the benefits and methods in our consolidating super section.

We’re here to help

If you’re a Virgin Money Super customer, you can access our specialist Helpline Advice Service and gain immediate Simple Super advice from qualified financial advisers—at no additional cost to you.

Financial advisers can help you with a range of enquiries including:

  • Superannuation rollovers
  • Superannuation customer investment choice selections
  • Selecting an appropriate super contribution amount versus paying down debt
  • Co-contributions
  • Spouse contribution splitting
  • General advice on retirement strategies
  • Selection of insured benefit levels
  • Salary sacrifice and additional voluntary contributions
 
 

 

Important stuff

The information above is intended as a guide only. If you are unsure about who you need to make contributions for we suggest you contact the ATO.

As an employer, it's important you fully understand your superannuation obligations as failure to meet these minimum requirements could mean financial penalties from the Government.

QuickSuper is a registered trademark and a product owned and operated by Westpac Banking Corporation ABN 33 007 457 141. Westpac’s terms and conditions applicable to the QuickSuper service are available after your eligibility for the free clearing house service is assessed by Virgin Money Super.

This information is of a general nature only and does not take into account your personal financial situation, needs or objectives. As we don't know your financial needs we can’t advise if Virgin Money Super will suit you. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide and Financial Services Guide before making a decision about the product. For further information about the insurance options refer to the Insurance Guide.

The Superannuation Fees described on the Fees page apply from 12 December 2016. Here you'll find the official Superannuation Industry (Supervision) Act 1993 ('SIS Act') definition for each fee type.

While there are no contribution, withdrawal or switching fees, a buy/sell spread applies at a fund level when purchasing and selling units. Other fees and costs may apply such as insurance fees. These are retained by the fund and are not paid to Virgin Money or the Trustee. All fees are inclusive of Goods and Services Tax (GST) and net of Reduced Input Tax Credits (RITC).

Before you rollover or consolidate your superannuation, you should check to see if insurance or other benefits will be impacted or lost. Some funds may also charge withdrawal or exit fees.

It is very important to note that superannuation is generally a long term investment. Past investment performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund. It is very important to note that superannuation is a generally long term investment and that past performance is not indicative of future performance.

Prepared by Virgin Money Financial Services Pty Ltd ABN 51 113 285 395 AFSL 286869. Virgin Money Super is a plan in the Mercer Super Trust ABN 19 905 422 981. Virgin Money Super is issued by Mercer Superannuation (Australia) Limited (MSAL) ABN 79 004 717 533 AFSL 235906 as trustee of the Mercer Super Trust. For more information about Virgin Money Super, please refer to the PDS which is available free of charge on our website or by calling the Customer Care team on 1300 652 770.

Source: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Super-accounts-data-overview/

SuperRatings award reflects a funds' value for money, and is awarded based on a rating system of investment, fees and service. SuperRatings does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for details of its ratings criteria.

The amount shown is an estimate only of the Indirect Cost Ratio (ICR) generally expected to apply to these investments for 2016-2017 Financial Year.

Virgin Money Super’s fund returns shown above are net earnings and are calculated after the deduction of applicable taxes and costs. The results are current as at 31 January 2017. These results are provided by Virgin Money Super Asset consultants. It is very important to note that past performance is not indicative of future performance.

The median results are provided by SuperRatings and are current as at 30 June 2016 as a benchmark only. Virgin Money Super has not verified its accuracy so we can’t guarantee that it is correct, and accept no liability for inaccuracies, errors or omissions.

Eligibility crtieria and fees apply. Aged 15-64 Death and Total and Permanent Disablity cover. Automatic Insurance cover is subject to Exclusions including Pre-Existing Medical Condition exclusion. This means that, you won’t be covered for any illness, injury, condition or related symptom that you were aware of or should have been aware of, or had a medical consultation for, were planning to have a medical consultation for, or should have had a medical consultation for in the two years prior to cover commencement. See the Virgin Money Super Insurance Guide for more information.

Automatic Death & TPD cover for Australian residents aged 15-64 with our default insurance offering. Conditions and Exclusions (such as pre-existing medical conditions) apply. See the Virgin Money Super Insurance Guide for more information.

The case studies shown are hypothetical and are not meant to illustrate the circumstances of any particular individual. All claims will be assessed in accordance with the policy terms. In the event of any inconsistency with other material, the insurance policy terms will prevail.
For further information regarding Virgin Money Super’s insurance cover, including terms, conditions and eligibility, please refer to the Insurance Guide which forms part of the Product Disclosure Statement (PDS). The PDS is also available free of charge by contacting Customer Services on 1300 652 770.
This information is of a general nature and has been prepared without taking account of your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives. You should read the relevant Product Disclosure Statement available by calling 1300 652 770 and consider if this product is right for you before making a decision to acquire or continue to hold the product.