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Is Your Superannuation Working For You?

For an Australian on the median full-time income of $72,000 per annum from age 20 through to 67, a 1% difference in investment returns can make a difference of $153,000 or 27% of your superannuation balance

Choosing the right super fund for you is very important and we can help!!

Table of super results

Source: moneysmart.com.au Superannuation Calculator

Compulsory Superannuation was introduced back in 1992 to help Australians fund their retirement. There are 5 broad fund categories including

  • Retail Super funds – which are operated by Banks or Investment Companies
  • Industry Super Funds
  • Public Sector funds – available for government employees
  • Corporate Super Funds – typically operated by a Retail or Industry Fund on behalf of an employer for its employees
  • Self-Managed Super Funds

Super Fund Types

Accumulation super funds are by far the most common, however a smaller number of Australians also have a Defined Benefit Fund.

Accumulation Fund

In an accumulation fund, your super contributions and investment returns “accumulate” over time.

The balance of your super fund will increase as:

  • Your employer makes superannuation guarantee contributions (SGC) – now equal to 10.5% of your salary if you are employed.
  • You make voluntary salary sacrifice contributions or personal deductible contributions. SGC, Salary Sacrifice and Personal Deductible contributions are all concessional (before tax) contributions and are taxed at 15% on entry to your super fund. If you exceed the $27,500 annual cap you may be subject to additional tax.
  • You make non-concessional (after tax) contributions.
  • You receive investment returns

Defined Benefit Funds

These funds are typically corporate or public sector funds, and most are now closed to new members. A Defined Benefit Fund uses a formula to determine the retirement benefit. The retirement benefit is typically determined by:

  • The money contributed by you and your employer
  • Your average salary over the last few years before you retire
  • The number of years you worked for your employer

How can you invest in superannuation?

You invest into superannuation by contributing money into a superannuation fund. Contributions can be made by you, your spouse, or your employer. There are a wide range of superannuation funds to suit your individual needs, and we can help determine which one is right for you.

Basic investment styles

There are many ways to invest your funds, and what this will mean to the way your capital value will behave over the short and longer term. The following is a brief snapshot of the investment range that can be considered. It is not an exhaustive description of the investment styles available.

Conservative (20% – 30% growth assets)

You are a defensive investor. You are willing to consider less risky assets, mainly cash only and some fixed interest investments. You are prepared to accept lower returns to protect the value of your capital.

Balanced (65% – 75% growth assets)

You are a growth investor. You are willing to consider assets with higher volatility in the short-term (such as equities and property) to achieve capital growth over the medium to longer term. Your investment mix will comprise a greater share of growth assets.

Aggressive (95% – 100% growth assets)

Your primary objective is capital growth. You are an aggressive growth investor and are prepared to compromise your portfolio balance to pursue greater long-term returns. You are willing to accept higher levels of risk. Fluctuation in capital is acceptable in the short-medium term for the greater potential for wealth accumulation. Except for a minimal level of cash for liquidity purposes, your investment mix will only consist of growth assets such as international and domestic equities.

Ethical Funds

These funds focus on investments or industries that are ethically responsible through social, environmental or other beneficial priorities. They can use a combination of negative screens to filter out companies that don’t fit criteria (eg. Companies with Tobacco, Oil & Gas holdings) or positive screens to focus on companies that do fit desired criteria (eg. Net Zero targets).

 How much superannuation will you need?

The amount of money you will need in retirement varies from person to person, and depends on:

  1. The kind of lifestyle you want
  2. Other income options in retirement (such as part-time work or payments from other investments) that will supplement your super, and
  3. The age at which you would like to retire.

Depending on your attitude towards investing, the goals you want to achieve, and how long you have to invest, people can be quite different in the way they invest their superannuation fund. Fleming Financial Planning will step you through what is right for you, monitor your investments over time, and ensure you remain on track to achieve your retirement goals.

This website contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.