A recent study has revealed that women are woefully below men in having adequate superannuation. Finance expert, Anthony Bell tells us about the changes to superannuation laws, in plain english, and the tips we need to know to boost superannuation and or manage our own.
It is very common for individuals to put the importance of superannuation to the bottom of the pile. Because of this, when it comes to retirement age one does not have enough money in ones own fund.
However, the government has incorporated three major changes that will assist you in increasing your superannuation balance.
These are;
1. A $500 annual boost for low-income workers superannuation balances. If you earn less than $37,000 the government will improve your super balance by $500.
2. Removal of the upper age limit for compulsory super. No matter how old you are if you are working you will be able to keep earning superannuation.
3. Increasing the employers’ contribution from 9% to 12%. The first increase will be in the 2014 financial year with compulsory superannuation going from 9% to 9.25%
There are some other changes to superannuation laws, however these changes will reduce your overall balance. This makes it even more important to understand these amendments to the legislation.
They include;
High income earners will incur a surcharge of 15% for super contributions that are made in pre tax dollars. If your taxable income is more than $300,000, your super contribution will be taxed at 15% plus a surcharge of another 15% on top.
The Pre Tax contributions cap has also been reduced to $25,000. The cap was going to be increased to $50,000 for individuals over 50 with super balances of less than $500,000; however, this has now been delayed until 01 July 2014.
In addition to the above points, other areas that you may need to be aware of include the following;
• You can take the advantage of the government super co-contribution payments of up to $500 if you are a low or middle-income earner by making eligible personal super contributions to your super fund
• It is important to know that you may have the option of having your excess contributions refunded if you breach the concessional contributions cap by up to $10,000.
• You could also be eligible for an 18% tax offset for contributions up to $3,000 made on behalf of your spouse if the spouse is not working or a low income earner.
• Alternatively, your spouse can also make contributions into your superfund in order to obtain the spouse tax offset, thus also providing a boost to your super balance. Aside from changes in legislation there are also other areas that you should also consider when working out strategies to increase your superannuation balance in time for your retirement.
• What fees are you paying? Have a look at the fees and charges being raised by your superannuation provider. You may be paying amounts unnecessarily, thus depleting your balance.
• The benefit of time. Many people don’t think about their superannuation until they get closer to their retirement. At this time, there may only be a couple more years to go until they are eligible to access their retirement funds. Rather than waiting until the last minute, take your superannuation seriously from today. Get appropriate financial planning advice and make your superannuation work hard for you every day.
by Anthony Bell www.bellpartners.com