With a various contribution options, superannuation can be a complex area for most people.
It’s important to form a strategy to make the most of the tax concessions, financial incentives and rebates. This will help to ensure your superannuation savings provide a comfortable standard of living in retirement.
By forming a strategy, you may take advantage of:
- Transition to Retirement (TTR) rules
- Choice of superannuation
- Self Managed Superannuation Funds (SMSF)
- Salary packaging (also known as salary sacrifice)
- Retirement income streams
- Employer Super Guarantee Contributions – 9.5% (until the 2021/22 financial year)
- Employee – Salary sacrifice contributions
- Employee – Voluntary contributions (after tax)
- Self employed – deductible contributions or non-deductible contributions
- Not working and under 65 – (non-deductible)
- Spouse – spouse splitting of spouse contributions, or contributions on behalf of a spouse.
Your decision about where and how your money is invested in superannuation could increase your income in a number of ways.
By rolling your superannuation money into a pension income stream at or after retirement, you can:
- generate more tax-effective income
- receive more generous Centrelink treatment
- have the flexibility to decide how your assets will be left to your beneficiaries.
Account-based pensions are the most common form of superannuation pension. They are specifically derived from superannuation money.
The pension income is paid from the balance of the money remaining in the your superannuation fund each year until it runs out. Payments can commence following full retirement after preservation age, or if you are permanently unable to work due to invalidity, or at age 65 regardless of whether retired or not at that time.
An account-based pension can offer a range of flexible investment options. You can position your investments so they are more effective in meeting income and growth needs in retirement.
This flexibility means control is ultimately retained by you over the level of investment risk and return within the fund.