1. It is an investment not a tax structure
A super fund is a trust which is subject to special rules on the taxation and preservation of your accumulated benefits; and can invest into a range of investments and asset classes. Regardless of age, your super is an investment where you can actively choose your investments based on the level of risk and how they fit with your other investments. Remember, it is not just a structure which offers taxation advantages.
2. My money is locked up
Your super is a lifetime investment project starting when you first enter the workforce until death. Even though your account is not accessible until you reach age 65 or a condition of release (such as retirement, death or invalidity) is met, you still have control. Find out more about your choices and control with super by speaking to a financial adviser.
3. I don’t have control
You do have control over your super since it is your money. Some people may choose to have a Self-Managed Super Fund (SMSF) in order to have more control. However, SMSF comes with more responsibility given your obligation to also be a trustee. Retail super funds could provide you with
the same investment options. At the same time, the role of Trustee is completed by a team of professionals with sound knowledge of the super and taxation rules.
4. It will provide for me in retirement
Yes, super will provide for your retirement. However, you need to ask yourself these questions:
• what will be my required level of income in retirement
• will I have sufficient super balance at my planned retirement date?
Knowing that you have enough super at retirement will depend upon your own personal circumstances and seeking financial advice to construct a comprehensive retirement planning strategy is essential.
5. It’s not my money until I retire
This is most definitely not true. Changing the way that you view your super is essential. It is your money and you do have control over it even though you cannot spend it at the moment.
6. I don’t need to worry about it until I am 50 or older
It is important to know that the longer you plan for your retirement the better chance you will have in achieving your retirement goal(s). You may also want to consider making contributions from a younger age because it will be harder for people (over the age of 50) to tax-effectively contribute
large sums of monies into super due to recent legislative changes.
7. Transition to Retirement (TTR) is NOT a valid financial strategy
The two main elements of a TTR strategy are:
• salary sacrificing into super
• receiving tax effective pension income from a super income stream.
TTR is a valid strategy if you are over age 55 as it can deliver several benefits including boosting your retirement savings plus a multitude of taxation benefits. Find out more about these benefits by speaking to a financial adviser.
8. Insurance through super is inappropriate
Whilst death and total & permanent disability (TPD) insurance through super have traditionally been a popular tax effective choice, it is also common to have income protection within super. Structuring your insurance within super can provide distinct advantages even though it can be complicated. Your employer super contributions can pay for the insurance cover but this can reduce your eventual retirement savings. This can be alleviated by making additional pre and post-tax contributions into super or even qualifying for the co-contribution.