In financial terms, superannuation or ‘super’ is a means of saving for your retirement. You can think of superannuation as a long-term pension plan that is initiated by a company to assist its employers in saving for the future. It is regularly referred to as a company pension plan. A common characteristic of funds deposited in a superannuation fund is that as the account grows over time, the money is usually able to grow without any tax implications, until retirement or withdrawal.
The money is generally ‘unused’ during your career and is used solely to fund your retirement.
You have your employer pay a certain percentage of your wages or earnings into your designated super account. Once a decent amount has been saved, the money can be used to invest throughout your career until you retire.
Your superannuation is your hard-earned money, so you must look after it. One way to ensure you have more control over your money is to create a ‘self-managed super fund (SMSF). There are many ways to apply for SMSF loans. Speak to your accountant and get professional advice before investing.
Understanding the Basics of Superannuation
As money is added to your account by your employer contributions and other growth means, the money is saved in a superannuation fund. This type of monetary fund is often used to pay out benefits to employee pensions as the participants become eligible as time passes.
When Do You Receive Your Super?
Your money is saved and invested throughout your time with the company, and you become able to withdraw your super upon reaching the official, proper age of retirement. There are other situations when you can receive your money earlier than reaching retirement age, but this is usually related to illness or infirmity. If you are diagnosed as infirm and unable to work, you can apply to withdraw your funds earlier than retirement age.
How to Choose a Super Account for Me
It’s essential to research carefully when setting up a super. Ask your accountant to consider the following criteria:
- Choosing an account with low fees or a flat percentage rate.
- Checking that your insurance is in order and you are covered against any losses.
- Be wary of any company that wishes to withdraw your super early.
- Combining your accounts can save money if you have multiple accounts.
A self-managed super fund opens up a much broader credit and investment universe than may otherwise be found in a more traditional retail environment or superfund.