Superannuation

Superannuation is not an investment in its own right but rather a specific environment in which to grow funds earmarked for your retirement.

What is superannuation?

Superannuation is designed specifically to fund your retirement. In general terms, under current legislation, it works like this:

  • During your working life, your super is built up through compulsory contributions made by your employer (concessional contributions) or after-tax money from your own pocket (non-concessional contributions). In some situations it may also be possible to receive additional pre-tax superannuation contributions in lieu of salary (salary sacrifice) or, if you are not an employee or receive less than a certain percentage of your income from employment, you may be eligible to make personal contributions and claim a tax deduction for those contributions.

  • As you near retirement, you can start to dip into your super through what’s called a ‘transition to retirement’ pension, which is an income stream, not a lump sum withdrawal.

  • Then, from age 60, and assuming certain conditions are met, your super can be withdrawn tax free. Or you may be able to leave your super within the superannuation environment and draw on it gradually as an income stream.

Super is locked away

One of the pluses (or minuses, depending on your perspective) of the superannuation environment is that we can’t normally access our super until we reach preservation age or retire from the workforce. This is a good thing from a retirement incomes perspective as it helps to ensure you will have the funds to support your retirement goals. It does mean though that you need to factor this limitation on accessibility into your investment decision making.

Next: Administering your portfolio

Help grow your superannuation savings during your working life and make the most of your retirement through superannuation with BT.
When it comes to financial advice, some want to do it all themselves, some want confirmation on decisions already made and others want a specialist who can help them along the way.
Be prepared to separate fact from fiction. Learn more about some important truths to keep in mind.
Managed funds let individual investors pool their money with other investors to benefit from a diverse range of underlying assets and professional investment expertise.