Superannuation helps secure the future of many in Australia. Here are some of the benefits.
Superannuation is designed to help us prepare for retirement as part of a three-pronged approach. For many Australians, a well-conceived super fund can be the difference between comfortable retirement and a constant struggle in the years when it is the most painful. Here are some of the reasons why we like superannuation.
Tax-Effective Savings
Superannuation is designed to help Australians become self-sufficient when they retire. It is set up with a series of tax breaks to encourage contributions.
Salary Sacrifice
Those who utilise salary sacrifice can reap huge savings because earnings that go towards salary sacrifice are only taxed at a rate of 15%. For someone in a tax bracket of 45%, this represents huge savings.
Tax-Effective Capital Growth
In most cases, the tax rate on money made through investments within a super fund are lower than the same investments outside of the super fund. While profit from an investment outside of the fund could be taxed as high as 46.5%, most super fund revenue is taxed between 10-15% depending upon the investment.
Lower Tax Rate During Retirement
When the super fund has started paying an allocated pension, there is no tax on capital gains or income. If retirement starts before the age of 60, the super fund will be responsible for a tax of 15% of the assessable amount until you reach 60.
Superannuation Benefits are Protected from Bankruptcy
If you have to claim bankruptcy, your super benefits are protected up to the Reasonable Benefit Limit (RBL) of your pension. This allows business owners and individuals to protect their assets against being seized by creditors during bankruptcy.
It must be noted here that firm rules are in place for those who try to manipulate this system in anticipation of declaring bankruptcy.
Approved Financial Planners can Help
At Approved Financial Planners, we specialise in superannuation funds. We can help you navigate the maze of regulations for a standard or a self-managed super fund. Your superannuation fund is too important to manage on the advice of friends, however well-meaning they may be or to start thinking about until you are ready to retire.
To learn more about how Approved Financial Planners can help maximise your super fund, call (08) 6462 0888.
