Good news, the amount your employer pays into your superannuation fund is going up this July, but the bad news is that this could make it more difficult to get that pay rise you were after.
If that’s the case, and for many it will be in light of subdued wages growth, then it’s a good time to think about how you can make that extra superannuation money work to your advantage.
The Super Guarantee will increase from 10% to 10.5% from 1 July, 2022 and it’s also set to rise to 12% in the not too distant future.
Also on the horizon is the scrapping of the $450 a month threshold for employer superannuation payments.
From 1 July, Australians will be entitled to super even if they earn less than $450 a month – this is great news for many women given that they are more likely than men to be on low incomes as a result of part-time and casual work around child care responsibilities.
Industry Super Australia chief executive Bernie Dean says now is a good time to check you are being properly paid superannuation and that your fund is working for you.
Here are five easy steps identified by Industry Super Australia that people can take now to boost their retirement savings:
1. Check with your fund to make sure you are getting paid all your legal super entitlements. Unpaid superannuation impacts 3 million workers a year – costing them a total of $5 billion and while most bosses do the right thing there are still some employers out there who deliberately rip workers off. And with the super guarantee rate rising to 12% it is more important to check that the full amount is being paid.
2. Consolidate your super funds into one account, finding lost or unpaid super is simple now using the Australian Tax Office tools.
3. Compare your existing super fund with others in the market to make sure it is meeting your needs. New government ‘stapling’ laws mean that workers are likely to stick with funds for longer. Alarmingly only 7% of people switched after they were told their fund failed a government performance test. Being stapled to one of those dud funds can cost a worker $230,000 at retirement.
4. Make sure the type of fund and level of insurance is right for you. Make sure the investment strategy matches your needs and appetite for risk – which your fund can help you with. Also be sure to check the insurance coverage is the right fit for you and your family.
5. If you find some loose change or get some type of windfall consider putting it in your super fund. It is a tax-effective way to make savings and with the power of compounding interest a little invested in super now, makes a big difference in retirement. A 30-year-old on average wages that salary sacrifices $20 a week into super has $67,000 more at retirement and gets a tax saving now.
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