Do you want to have a comfortable lifestyle when you retire? If you do, then investing more in your employer’s superannuation contributions can grow your nest egg. If you have low income, you may be qualified for a government bonus contribution.
In this section, we will share with you how to check your super for any employer contributions and explain how making additional contributions can increase the amount of superannuation you will acquire once you retire.
Checking out your employer contributions
If you’re qualified to get superannuation contributions, your employer should contribute some amount into your super account. This is called “super guarantee,” which is 9.5% of the usual employee savings. For instance, an extra $4,750 into superannuation should suffice.
Ordinary time income is your earnings for the usual work hours, including commissions, paid leaves, allowances, bonuses, and over-award payments.
How much superannuation you should get
Useful tip: if you are a contractor, make use of the ATO’s contractor/employee decision tools to figure out if you are entitled to employer super contributions.
You can get superannuation from your employer if you:
- Are 18 years old and above
- Have a monthly salary of $450
If you are below 18 years old, a domestic or private worker (like a carer or nanny), you should also work beyond 30 hours per week to be qualified for superannuation from your employer.
Check the amount of super you are receiving
You can check how much super you are being paid with through your payslip.
Employees compute superannuation every payday but will only transfer superannuation within your fund once each quarter. Some will prefer to pay superannuation more frequently and so it’s also important to ask your employer how often your super is being paid for.
You have to be certain that your employer is paying your super regularly by checking the latest super check or statement of your transactions online. If you happen to have a myGov account, you’d also be able to monitor your superannuation’s status.
It’s important that you monitor and follow up on your super so it doesn’t end up as unclaimed super if it continues to be inactive for a very long time.
Updating your super fund with your details
If you do not receive a statement from your superannuation fund every year, either through paper or electronically, then it’s probably that they did not have your contact details. Contact your fund as soon as possible to make sure your details are updated.
What you should do if your employer isn’t contributing to your super
Companies experiencing financial difficulty may sometimes cheat the rules by not contributing super for their staff. If your employer isn’t making super contributions on your behalf, and you are not sure whether they are paying enough, you must:
- Talk the matter out with your employer and ask them how your superannuation is being contributed and how frequently the contributions are done.
- Contact your superannuation fund to see whether your super is being paid for
- Check your myGov account, and make sure it is connected to the Australian Tax Office (ATO) to see the amount being paid into your superannuation fund.
- Contact the ATO and address your concerns to them.
If your employer hasn’t paid your superannuation, you can discuss the situation with the Australian Tax Office.
How to boost your superannuation
You can boost your super by putting additional money into it. Even the small contributions will accumulate and add up in time. If you happen to be a low-income earner, you should be qualified for a bonus government superannuation contribution.
Making pre-tax super contributions
You can discuss with your employer your desire to pay part of your pre-tax earnings as an extra contribution towards superannuation (concessional contributions). This is generally considered as salary sacrifice. This is a tax-effective method for those earning more than$37,000 each year.
Concessional contributions are usually capped at $25,000 each financial year. This entails that the total employer or salary sacrificed contributions shouldn’t exceed $25,000 every year. Should you exceed this threshold, you may be required to pay more tax.
Low-income super tax offset
If you’re earning $37,000 or lower, you may acquire a government LISTO or ‘low-income superannuation tax offset.’ The yearly $500 amount, will constitute 15% of the concessional contributions that you or your employer contributed to your superannuation account for the financial year.
You don’t have to worry much about this; the Australian Tax Office or ATO will figure out your eligibility and pay for your low-income superannuation tax offset straight into your superannuation account. Just make sure that you have submitted personal details to the superannuation fund – features such as TFN – so you don’t miss any payment.
Making after-tax super contributions
Just contribute your money into your superannuation. They’re called after-tax super contributions or non-concessional contributions since they are already paid on cash. This is not the same as salary sacrifice, which occurs before the income is being taxed.
You can’t claim a tax education for the contributions that are kept as non-concessional contributions. The non-concessional contributions cap is $100,000 every financial year. If you’re below 65, you can bring forth two years’ worth of non-concessional cap, enabling you to make $300,000 worth of contributions each time, depending on the superannuation balance.
Should you contribute more, there may be a need for you to pay more tax.
If you’re earning below $52,697 every year, and make after-tax contributions, whether irregular lump sums or regular contributions, you could be qualified for a matching government contribution. These are called government co-contribution.
If you’ve been earning below $37,697, the maximum co-contribution would be $500 according to the 50c of the government for each $1 of contribution. This co-contribution amount will reduce your once your earnings increase.
To get the co-contribution, you’ll have to lodge the year’s tax return. The government will then figure out the amount you are eligible for. If you’re eligible, you’d be paid with a government co-contribution straight into your fund.
Working out the best combination of superannuation contributions
If you are capable of contributing more into your superannuation, you will want the best method to boost your super savings.
Finding lost super
If you happen to have multiple superannuation accounts, you can also find your lost super. This lost superannuation may have hundreds or even thousands of stored money – an excellent addition to your superannuation.
You can find lost super online through the ATO’s SuperSeeker or with the assistance of companies who specialize in finding and consolidating lost super.
Louis Lim is a writer and blogger who specializes in topics related to superannuation. He’s written hundreds of articles related to the subject at Australian Super Finder.