Your superannuation

While there are a few exceptions, generally your employer must contribute 9% (there are limits for high income earners) of your salary into a complying Super fund.

You can also make additional contributions through salary sacrifice or after tax. Again there are limits, and in some cases lower income earners also receive contributions from the Government.

The money is then invested by the fund on your behalf. The benefits are many, however four stand out.

1. Long-term savings - Super is designed to help you save for the future throughout your working life. Your investment also enjoys the benefit of compounding returns.
2. Tax effective earnings - for most of us the tax rates applied to a Superannuation fund will be lower than what we would be charged on other investments. For example, Super funds pay a maximum 15% tax, (on entry and on the earnings once in) and in some cases the rate can be even lower, depending on the investment.
3. Tax-free withdrawals - at retirement age (currently 60+), you can withdraw your money either as a lump sum or as a regular income, tax-free. (Again there are limits. You also need to have invested in a taxed Super fund. For example, some Government funds are not taxed and withdrawals receive different treatment).
4. Insurance - in many cases you can obtain Life and/or Disability Insurance and Income Protection through your Super.

In most cases you have the right to choose your own super fund. However, there are some workers under industrial awards who don't have this choice. You can find out what applies to you by asking your employer or visiting the ATO and searching 'choosing a super fund'.

In most cases if you choose to do nothing, your super will be invested in the fund selected by your employer.

In terms of which fund to use, you have four basic options:

1. A fund run by the company you work for.
2. A fund open to employees in your particular industry.
3. A fund open to everyone.
4. A self-managed fund.

Try to choose a fund that has a history of producing solid returns and matches your own 'risk profile'. This is your comfort level with the strategies employed and it will change depending on your circumstances and the time you have to retirement.

Does the Super fund offer a pension option?

Not all funds offer this option and the closer you get to retirement the more important it may become. For example, if the fund doesn't offer a pension option then when you turn 55, you may have to switch funds to take advantage of strategies such as Transition to retirement.

Each fund should provide what is known as a Product Disclosure Statement. This statement should clearly outline the following:

• The fees and charges associated with the fund.
• The benefits available, including things such as disability and death benefits.
• How contributions will be made.
• How the fund will be administered. (This is important from your perspective, as an efficient fund will save you time and money).
• The investment strategy employed.
• Whether individuals can choose from a range of investment strategies.
• What the fund earned for its members over the past five years.
• Any commissions or other incentives offered to the fund as a result of the investments it makes.
• Its flexibility. For example, can the company make additional payments on your behalf (above the minimum 9%)? This could be important in terms of salary packaging.

Comparing performance

When evaluating performance think about the following:

• Check performance over the long-term (at least five years).
• Compare similar funds.
• Ensure the investment strategy suits your needs.
• Remember that past performance is no guarantee of future returns.

You have the option of starting and managing your own superannuation fund. This is an increasingly popular strategy for people who want to enjoy the control and flexibility over their Super investments.

However, the investments you make must still comply with the regulations set out by the ATO.

For example, you can't use your Super fund to buy your home, but you can invest in property.

For more information about the regulations go to the ATO website and put 'Self-Managed Super Fund' into the search box.

The basic structure of an SMSF is as follows:

• It has four members or fewer.
• Each trustee is a member and each member is a trustee.
• No member of the fund is an employee of another member (unless they are related).
• No trustee receives remuneration for work involved in managing the fund.
• The trustee can be a corporate entity.
• Like all funds, it is regulated and must report to the ATO.

Five things to think about:

1. You are the trustee - you will be legally responsible for ensuring the fund complies with all rules and regulations. You may delegate this duty to a professional, but the responsibility still stops with you.
2. SMSF are not for everyone - they can be costly to establish and maintain and you need a significant amount of Super (the Government suggests at least $250,000) to make it worthwhile.
3. Your skills - do you have the financial expertise and experience to successfully manage your own self managed super fund?
4. Your time - do you have the time to devote to managing you own Super?
5. Your future - remember, this is your future. Are you sure the results you'll achieve will be better than those achieved by a professionally managed fund?

If you've changed jobs in the past, or switched funds for any reason, it's possible you have money invested in a Super fund that you're not aware of. This is known as lost super.

You can track it down through the ATO – go to the ATO website click on the 'individuals' page and type 'Super Seeker' into the search box on the top right hand corner.

While there are special exemptions in a few circumstances, in most cases you can't access your super until a certain age.

The age range is currently between 55 and 60 (depending on when you were born) and you can access a calculator to determine what applies in your case at the Moneysmart website.

When you do withdraw your super in retirement you generally have three choices:

1. Withdraw your super as a lump sum.
2. Take it in the form of a retirement income stream.
3. A combination of both.

Want more information on Super and your options?

• Go to the Moneysmart website - for a host of great information and tools to compare funds.
• Go to the Canstar website - to compare funds.
• Go to the ATO website - individuals page and put 'Super' into the search box for the facts on regulations and tax implications of the various options.
• Call the Australian Taxation Office Super Infoline 13 10 20.

Superannuation can be complex. Deciding if it's best to make additional contributions or if you should invest elsewhere, along with what to do as you approach retirement takes specialist expertise. Fortunately, we can help.

An A-Z Review^® with an ANZ Retirement Banking Specialist: There is more to retirement than just your Superannuation. Only ANZ has Retirement Banking Specialists, professionals who know how to help you make the most of your everyday banking. 

• Request an A-Z Review^®

An ANZ Financial Planner could help you with strategies designed to grow your Superannuation leading up to retirement and to maximise your income in retirement. Your initial discussion is complimentary and without obligation. 

• Make an appointment with a Financial Planner.