Superannuation

Superannuation, or 'super' as it's more often known, is a major element of most people’s personal financial management. Apart from their own home, for many people superannuation comprises much of their entire personal wealth. It is very important.

Super is basically a form of compulsory saving for employees and a form of tax-advantaged investment for all working people, whether they be employees, self-employed, or enjoying retirement.

In this guide, we introduce the basics of superannuation: what super is for, how money gets into super, how it is managed when it gets there, and how it can be used both while it is in the fund and when it is paid out.

Please feel free to send a link for this e-book to any other person who would find it helpful. And, if you would like to discuss your own super situation, please do not hesitate to contact us.

What is super?

Super is a long-term savings arrangement designed to help individuals accumulate wealth to enable them to fund (at least some of) their own retirement. Becoming self-sufficient like this reduces people’s reliance on government services such as the Age Pension.

Many countries use some form of superannuation. Australia’s current system took form in 1983, when the Hawke Labor government reached an ‘Accord’ with trade unions. The unions agreed to forego direct pay increases in return for the introduction of compulsory super contributions for their members. Initially, employers were obliged to contribute an amount equal to 3% of their employees’ salary or wages into a super fund on that employee's behalf. At a stroke, this meant that all affected workers started to save 3% of their annual income in a savings vehicle which could not be accessed until retirement.

The system was expanded in 1992 to cover all Australian employees. This system became known as the ‘Superannuation Guarantee’ and it is still in place today. The introduction of compulsory super came as demographic analysts realised that the Australian population was ageing. This demographic shift would place a substantial strain on future social security benefits paid by the Government, especially in the form of the Age Pension.

The amount held in super has continued to grow impressively. As of early 2025, the total held in superannuation funds was approximately $3.9 trillion. That's a huge pool of national savings working towards funding our collective retirement. 💰

Forced Saving for Retirement

Given that employers must make contributions on employees' behalf, super is effectively forced saving. And given that superannuation benefits cannot generally be accessed until a person retires, super is effectively forced saving for retirement.

Saving for retirement is the predominant purpose of superannuation. Indeed, the law states that saving for retirement has to be the sole purpose of a fund if it is going to enjoy the tax concessions available for super. There is one other thing for which super is able to be used: it also provides a way for people to finance certain life insurance policies during their pre-retirement years.

The Superannuation Guarantee system has had a positive effect – something that is often overlooked when super becomes a political topic. International studies, such as the Mercer CFA Institute Global Pension Index, consistently rank Australia’s retirement income system among the best in the world. This is largely thanks to the robust framework of our superannuation system.

Put simply, Australia’s superannuation system is undoubtedly one of our key economic strengths.

Money that is transferred into superannuation on behalf of a member is known as a ‘contribution.’ There are two main types of contribution: concessional and non-concessional.

Concessional contributions

Concessional contributions are often known as ‘before-tax’ contributions. This means that they are generally made using income that hasn't yet been taxed at your personal income tax rate. Contributions can be made by employers or by you.

Employers make contributions in two ways:

1. Via the compulsory Superannuation Guarantee (SG) that must be paid for all eligible employees.
2. Via additional contributions over and above the SG amount (which can include salary that an employee chooses to have paid into their super fund instead of to them – usually known as 'salary sacrifice').

Individuals can also make a contribution into their super fund and claim a tax deduction for doing so. These are known as 'personal deductible contributions.'

Once concessional contributions arrive in a super fund, they are generally taxed at 15%. The fund pays this tax, and the member's balance is reduced accordingly.

Tax on concessional contributions

As mentioned, concessional contributions are taxed at a flat rate of 15% when they enter the super fund. The fund pays this tax directly to the Australian Taxation Office (ATO).

To illustrate how this all works, think of an employee earning $70,000 a year. Under the Superannuation Guarantee rules, her employer must make a contribution worth 12% of her salary into super (this is the rate for the 2025-26 financial year). 12% of $70,000 is $8,400. The employer pays this full amount directly into the employee’s super fund.

This is treated differently to the $70,000 of salary paid to the employee. For the employee’s salary, the employer must withhold the employee’s income tax and send it to the ATO, paying only the after-tax amount to the employee. So, for salary, the employer pays money to two places: the employee and the ATO. For super contributions, the employer pays the full pre-tax amount to just one place: the superannuation fund.

In our example, the employer contributes $8,400 directly to the fund. Once the money arrives, the fund pays tax of 15% ($1,260) to the ATO. This leaves $7,140 in the employee’s superannuation account.

This 15% tax rate on contributions is a key benefit of super. For the employee on $70,000, her personal marginal tax rate is 30% (plus the 2% Medicare levy). If she had received that $8,400 as salary, she would have paid $2,688 in tax and levy ($8,400 \times 32\%). This would have left her with only $5,712 in her pocket.

By receiving the money in super, she is $1,428 better off ($7,140 - $5,712). In return for having the money preserved for retirement, the employee starts with a significantly larger investment.

The lower tax rate within super is deliberate. It encourages people to use superannuation and helps their retirement savings grow faster, as more of the investment earnings are retained within the fund.

High Income Earners - Division 293 Tax

The standard 15% tax rate applies to contributions for people whose income is less than $250,000. For high-income earners who have an 'adjusted taxable income' over $250,000 per year, an additional 15% tax is levied on some or all of their concessional contributions. This brings the total tax on those contributions to 30%.

This extra tax is known as ‘Division 293 tax,’ named after the relevant section of the tax act. Your 'adjusted taxable income' for this purpose is basically your taxable income plus your concessional super contributions.

This reduces the tax benefit for high-income earners, but super remains a tax-effective vehicle. Even at 30%, the tax rate is still considerably lower than the top personal marginal tax rate of 45% (plus Medicare levy).

If your income is hovering around the $250,000 mark, some careful planning can make a real difference. It’s a good idea to seek advice well before the end of the financial year, as it's often too late to do anything afterwards.

Salary Sacrifice

Salary sacrifice is an arrangement where an employee agrees to have some of their pre-tax salary paid directly into their super fund by their employer. This adds to the compulsory Superannuation Guarantee contributions.

The logic is simple. As we saw in the example above, money contributed to super is taxed at a lower rate (15% or 30%) than salary paid to you personally. For most people, this means you end up with more money saved for the same amount of gross pay.

The financial benefit of salary sacrifice increases as your income and marginal tax rate rise. Here are the personal income tax rates for the 2025-26 financial year (excluding the 2% Medicare levy):

As you can see, anyone earning over $18,200 pays a higher rate of tax on their personal income than the 15% paid on super contributions.

Personal Deductible Contributions

Most people can also make contributions directly to their super fund from their own bank account and then claim a tax deduction for it in their tax return. This has the same tax outcome as salary sacrificing. You must notify your super fund of your intention to claim the deduction before you lodge your tax return.

The Concessional Contributions Cap

The tax advantage for concessional contributions is a ‘limited offer.’ There is a cap on the total amount of concessional contributions you can make each year. This cap includes your employer's SG payments, any salary sacrifice amounts, and any personal deductible contributions you make.

For the 2025-26 financial year, the annual concessional contributions cap is $30,000.

Contributions that exceed this cap may be taxed at your marginal tax rate.

If your total superannuation balance was less than $500,000 on 30 June of the previous financial year, you may be able to use the ‘carry-forward’ rule. This allows you to use any unused portion of your concessional cap from the previous five financial years. For example, if you only contributed $15,000 last year, you could potentially contribute up to $45,000 this year ($30,000 for this year plus the unused $15,000 from last year), provided your total super balance is below the threshold.

Contribution splitting

You may be able to 'split' some of your concessional contributions with your spouse. This involves transferring up to 85% of your before-tax contributions from a financial year into your spouse's super account in the following financial year.

This rule can be particularly helpful for couples where one partner has taken time out of the workforce or works part-time, often to raise a family, and has a lower super balance as a result. It allows couples to build a more balanced retirement nest egg between them.

Non-concessional contributions

Non-concessional contributions are made from your ‘after-tax’ money. Because you've already paid income tax on this money, these contributions are not taxed again when they go into your super fund. You also don't get a tax deduction for making them.

People often make non-concessional contributions when they receive a lump sum, such as from an inheritance or the sale of an asset, and want to invest it in the tax-friendly super environment. While the contribution itself isn't taxed, once it's in the fund, the investment earnings are taxed at the low superannuation rate of 15% (or even less for some capital gains).

The amount you can contribute as a non-concessional contribution (NCC) is also capped.

• The annual NCC cap is $120,000.
• If you are under 75, you may be able to use the ‘bring-forward’ rule to contribute up to $360,000 at once, covering three years' worth of caps.
• You can only make non-concessional contributions if your total superannuation balance was less than $1.9 million on 30 June of the previous financial year.

From 1 July 2022, the 'work test' (requiring you to have worked 40 hours in a 30-day period) was removed for people aged 67 to 74 wanting to make non-concessional contributions. This work test still applies if you wish to claim a personal tax deduction for your contributions.

Downsizer Contributions

A special rule allows eligible individuals to contribute up to $300,000 ($600,000 for a couple) from the sale of their main residence into their super. As of 1 January 2023, you only need to be 55 years or older to be eligible.

This is not treated as a non-concessional contribution and doesn't count towards your NCC cap. The total super balance limit of $1.9 million also does not apply to this type of contribution. It's a powerful way for older Australians to move wealth from their family home into the super system to better fund their retirement. This measure is quite specific, so we encourage you to seek advice if you're contemplating downsizing.

A member of a superannuation fund is entitled to transfer their benefits from one fund to another. This is known as a ‘rollover.’ A rollover does not trigger a tax charge, as the money was either taxed when it first arrived in the original fund (concessional contributions and earnings) or was not subject to tax in the first place (non-concessional contributions).

(There is one rare exception to this: when an 'untaxed element' is held in the existing super fund. This doesn't happen often, but it pays to check with your fund that all money has been taxed before you perform a rollover. We can help you check this).

Rolling over superannuation benefits has both advantages and disadvantages. It should only be done when the advantages clearly outweigh the disadvantages.

The advantages of rollovers

There are several good reasons to consider rolling your super benefits from one fund to another.

Consolidation

One of the main reasons to roll over benefits is to consolidate super accounts that might be spread across a number of different funds into just one or two.

Under the Superannuation Guarantee system, people often accumulate a new super account with each new job. This can be particularly true for those who have been in the workforce for a long time. Consolidating these accounts into one fund can make your super much easier to manage and keep track of.

It can also reduce the overall fees you pay. Super funds typically charge a mix of flat administration fees (a fixed dollar amount per year) and variable investment fees (a percentage of your balance). If you have multiple accounts, you're likely paying multiple sets of flat fees. Consolidating into a single fund means you only pay that flat fee once.

For example, a person may have two super funds holding $20,000 each. If they are paying a flat fee of $100 per year per fund, this is $200 in total, or 0.5% of their total benefits of $40,000. If they consolidate their benefits into one fund and pay only a single flat fee of $100, the total fee falls to 0.25% of their benefits.

Better insurance coverage

As we'll discuss later, super funds often provide life insurance for their members. The quality, cost, and features of this insurance can vary significantly between funds. Rolling your benefits over to a fund that offers insurance better suited to your needs can be a very sensible move.

However, comparing insurance policies can be complex. We encourage you to get advice before changing funds in pursuit of better insurance.

Lower fees

Beyond just saving on multiple flat fees, rolling over to a new fund might give you access to lower percentage-based management fees. Most super funds invest in similar markets, so for a given investment option, performance can often be comparable. Finding a fund that achieves solid results for a lower management fee means more of your money stays invested and working for you.

Insurance premiums can also differ between funds. It might be possible to get cheaper insurance by moving to another fund. But a word of caution: when comparing insurance, a lower price is only a benefit if the policies offer the same (or better) level of cover. Sometimes a cheaper policy is cheap because it is more restrictive or has more exclusions. The best policy is one that will actually pay out if you need to make a claim.

The risks of a rollover

Loss of ancillary benefits

The main risk when rolling over superannuation is the potential loss of valuable benefits, especially insurance.

Superannuation law allows funds to provide ‘ancillary benefits’ to members, which include risk insurance like death cover and total and permanent disability (TPD) cover. Many super funds offer this insurance to members on a 'default' basis, where you are automatically given a certain level of cover when you join.

When you roll your super out of a fund, you close that account, and any insurance cover attached to it will be cancelled.

This is a critical point. You must ensure you have equivalent or better cover in place in your new fund before you cancel your old policy. Otherwise, you could be left uninsured, which could be financially devastating for you or your family if something unexpected were to happen.

Recent government reforms, designed to stop members’ balances being eroded by unwanted fees, have meant that insurance on inactive, low-balance accounts is now automatically switched off. This makes it more important than ever to be aware of what insurance you have and to actively manage it.

A decision to roll over your super is often also a decision to change your insurer. This should be done with care and with a full understanding of what you might be giving up. Before you roll over your super, it's always best to check the fine print.

Once your contributions are in your super fund, they don't just sit there. The fund combines the money held on behalf of all its members and invests it in a range of assets. The goal is to generate investment returns, which are then added to your account balance, helping it grow over time.

All super funds are managed by one or more ‘trustees.’ As the name suggests, these people or companies manage the fund ‘on trust’ for the benefit of the members. In a large public super fund, the trustee acts much like a Board of Directors. In a self-managed superannuation fund, the members are also the trustees, meaning they look after their own retirement money directly.

Managed superannuation funds

The majority of Australians have their super in what are known as 'managed superannuation funds.' These are large funds where individual members have an account, but their money is pooled with all other members' money to be invested by professionals.

Frequently, members of these funds are given a choice as to how their money is invested. At a simple level, you can typically choose the level of risk you are comfortable with in the pursuit of investment returns.

Put very simply, managed funds generally invest in a mix of asset types:

• Cash and fixed interest: Such as term deposits and government bonds. These are considered lower-risk investments that typically provide modest, stable returns.
• Property: This can include direct ownership of commercial buildings or investments in listed property trusts.
• Equities: Generally shares in Australian and international companies.

Property and share-based investments tend to be higher risk, meaning their value can go up and down more dramatically. To compensate for this higher risk, they offer the potential for greater investment returns over the long term.

When you choose an investment option (for example, 'High Growth' or 'Balanced'), the fund directs your portion of the money towards a mix of investments that fits that profile. These funds charge fees for managing the investments on your behalf.

Self-Managed Superannuation Funds (SMSFs)

In a self-managed superannuation fund (SMSF), the members are also the trustees. This gives them direct control and responsibility for the fund's investment decisions.

An SMSF must have a documented investment strategy that outlines the fund's investment objectives and how it plans to achieve them. The ATO provides many helpful resources and guidelines for trustees on how to establish and maintain a compliant investment strategy.

Typically, the members of an SMSF have very similar financial goals, which allows them to manage their benefits under a single, unified strategy. For example, a married couple will generally have the same retirement timeline and risk tolerance, making it practical to manage their super together in an SMSF.

Investment profiles and superannuation

The term ‘investment profile’ refers to the level of risk an investment strategy is exposed to. At one end of the spectrum is a conservative strategy, which prioritises protecting the capital and will favour investments like cash and fixed interest. At the other end is a high growth strategy, which aims for maximum long-term returns and will favour investments like shares.

Generally, your investment profile should be heavily influenced by your investment timeframe—that is, how soon you will need to access the money. If you need the money in the short term, a conservative strategy is usually appropriate to avoid the risk of a market downturn just before you need to withdraw. If you won't need the money for a very long time, a growth-oriented strategy often makes more sense, as you have time to ride out the ups and downs of the market.

It's important to remember that super is different to your other savings. The money is 'preserved' until you reach a certain age and retire. This means that for most people, especially younger people, superannuation is a very long-term investment.

As a result, people can sometimes be a little too cautious with their super investments, switching to a conservative strategy too early in life.

It often makes sense to have different investment profiles for different pools of money. Consider Julian, for example. He is 30 and is saving for a house deposit. Julian has $50,000 in a personal savings account and $30,000 in his super fund.

Because the $50,000 will hopefully be needed for a home loan deposit in the next few years, a conservative approach for this money makes sense. The last thing he wants is for its value to drop just as he finds the right property.

Conversely, Julian cannot access his super for at least another 30 years. A conservative strategy for his $30,000 in super would mean missing out on decades of potential growth. For this money, a high growth option would be far more suitable for his circumstances.

In addition to providing for your retirement, your superannuation fund can also be used to purchase certain types of life insurance (sometimes known more generally as ‘risk insurance’).

Many, if not most, managed super funds offer various forms of life insurance to their members. Because of the tax-advantaged nature of super, holding insurance this way can often be a more cost-effective way to get the cover you need. What’s more, if you are already a member of a particular fund, setting up a new policy can be relatively easy.

As a general rule, premiums for death cover and total and permanent disability (TPD) cover are not tax-deductible if you pay for them personally from your after-tax income. However, if the policy is held within your super fund, you can pay for the premiums using pre-tax money (via concessional contributions), which creates a significant tax benefit.

Let’s look at an example. Wendy has a marginal tax rate of 30% (plus the 2% Medicare levy). She needs to pay an insurance premium of $1,000 for her life and TPD cover.

• If she pays this premium personally, she must use after-tax money. To have $1,000 left over to pay the insurer, she first needs to earn approximately $1,470. Of this, she pays about $470 in tax and the Medicare levy (at a rate of 32%), leaving her with $1,000.
• If she pays this premium via her super fund, she can contribute the money as a concessional contribution. To get $1,000 into the fund to pay the premium, she only needs to contribute about $1,176. The fund pays 15% contributions tax ($176), leaving it with $1,000 to purchase the policy.

From Wendy’s point of view, the insurance is about $294 cheaper in pre-tax terms ($1,470 - $1,176) when bought through super.

This tax effectiveness is not the only benefit. Superannuation is effectively forced savings for retirement, meaning the money is generally locked away. People who need life insurance most—for example, parents with financially dependent young children—are typically well below retirement age and often find their household budgets are tight.

Using super to pay for insurance premiums means you don't have to find the money from your day-to-day disposable income. This helps solve a common paradox: the very reason you need life insurance (e.g., having dependents) often makes it harder to afford.

Of course, if your super benefits are used to purchase insurance, there will be less money remaining when you eventually retire. If you spend some of your super, you will be left with less super. However, the point is that the total amount available to support you and your family—including personal savings and the insurance safety net—is greater than it would be if you paid for the insurance with your more highly-taxed personal income.

Using super to purchase income protection insurance

While it often makes sense to use super for death and TPD cover, it can be less advantageous to hold income protection insurance inside your fund.

Firstly, premiums for income protection insurance are generally tax-deductible in your personal tax return. If your marginal tax rate is higher than 15%, you will get a larger tax deduction—and therefore a lower net cost—if you hold the policy in your own name.

Returning to Wendy's example, let's imagine she is paying $1,000 for an income protection policy.

• If purchased through her super fund, the fund pays the $1,000 premium and can claim a tax deduction of 15% ($150). The net cost to her super balance is $850.
• If she pays the $1,000 premium personally, she can claim a tax deduction at her marginal tax rate of 32% (including the Medicare levy). This means she gets $320 back on her tax return, making the net cost to her only $680.

But tax is not the only reason that holding income protection in super can be tricky. When an insurance policy is owned by a super fund, any benefit payments are paid to the super fund, not directly to you. For you to receive the money, the fund must be legally allowed to release it, which depends on you meeting a ‘condition of release.’

While death or total and permanent disablement are clear conditions of release, the rules around temporary incapacity (which is what income protection covers) are much stricter. It is quite possible for the insurer to agree to pay your claim, but for the super fund’s rules to prevent you from accessing the money. This is illustrated in the following story.

A few years ago, a heart-breaking story emerged involving a father whose young daughter needed a liver transplant. He was a suitable donor, but the procedure to donate a piece of his liver required him to take three months off work.

He had an income protection policy held through his super fund and expected it would cover his loss of income during his recovery. The insurer agreed to pay the claim. However, there was a catch. The payment went to his super fund, and the fund's rules stated that benefits could not be released for what was termed ‘elective surgery.’ From a strictly legal standpoint, the surgery was elective for the father, as it was his daughter’s life at stake, not his own.

This frustrating situation highlights the importance of getting the structure of your insurance right. Super can be an excellent tool for funding some types of insurance, but it's not always the best solution for all of them. It is for precisely this reason that it is important to speak with an adviser before putting your risk insurances in place.

The overall purpose of super is to grow your savings to provide for your retirement. To ensure the money is there when you need it, there are strict rules about when you can access it. You must meet a ‘condition of release’ before a fund is allowed to pay benefits to you or your beneficiaries.

The most common conditions of release are:

• You have reached age 65 (even if you are still working);
• You have reached your ‘preservation age’ and have permanently retired;
• You cease an employment arrangement on or after age 60;
• You have passed away, in which case the benefit is paid to your beneficiaries or your estate.

Your 'preservation age' is the age you must reach before you can access your super upon retirement. It is set by law and depends on when you were born.

Special Circumstances

You can also access your super in some special circumstances, including:

• Permanent incapacity (you are unable to work again due to illness or injury);
• Temporary incapacity (income protection payments may be made from your fund);
• Severe financial hardship (subject to very strict criteria);
• Specific compassionate grounds (such as for certain medical expenses);
• You have a terminal medical condition.

The trustee of the super fund must ensure you have met a valid condition of release before any funds can be paid out.

How to withdraw the money

There are two broad ways to take your money out of super once you are eligible: as a lump sum or as an income stream (often called a pension). You can also use a combination of both.

If you plan to spend a large amount of money at once (for example, to pay off a mortgage), then a lump sum makes sense. If you need money to live on day-to-day, an income stream is usually the better option.

Income streams or pensions

An income stream involves keeping the bulk of your money invested in the super system while drawing a regular payment to live on. You are required to withdraw a minimum amount each year, which is calculated as a percentage of your balance.

The government strongly encourages people to use income streams. The main incentive is the tax treatment: once you move your super into the 'retirement phase' to start an income stream, the investment earnings on those assets become completely tax-free. No tax on interest, dividends, or capital gains. A 0% tax rate is very hard to beat!

There is a limit on how much super you can transfer into this tax-free retirement phase. This is known as the Transfer Balance Cap.

• The general Transfer Balance Cap is currently $1.9 million.
• This is a lifetime limit, and your personal cap may be different depending on your circumstances, especially if you have previously started an income stream.

For most people, this cap is more than enough. If you are fortunate enough to have more than $1.9 million, any amount above the cap can remain in an 'accumulation account', where earnings are still taxed at the low super rate of 15%.

Transition to Retirement (TTR) income streams

A Transition to Retirement (TTR) income stream allows you to start drawing an income from your super once you reach your preservation age, even if you are still working. The idea is to allow you to reduce your work hours without a big drop in your take-home pay.

When TTRs were first introduced, they shared the same tax-free earnings benefit as standard pensions. This made them a popular tax-reduction strategy. However, since 1 July 2017, the investment earnings on assets supporting a TTR are taxed at the standard 15%, just like funds in an accumulation account.

This change has reduced their appeal significantly. Now, a TTR generally only makes sense for people who genuinely need to supplement their income to be able to afford to ease into retirement.

Lump sums

Lump-sum withdrawals are often used to finance large, one-off expenses. Common examples include paying off a home loan, buying a new car, funding a big holiday, or helping adult children financially.

You do not have to withdraw your entire balance as a lump sum. You can take out just what you need. If you withdraw more than you immediately require, you need to consider where you will invest the excess money. Generally, it makes sense to leave as much wealth as possible within the tax-friendly superannuation environment to continue working for your future.

If you are self-employed, you need to pay special attention to your superannuation. While employees receive compulsory contributions from their employers, if you work for yourself, the responsibility for building your retirement savings rests entirely on your shoulders.

Research consistently shows that self-employed people, on average, reach retirement with significantly lower super balances than their salaried counterparts. For business owners, it’s all too easy to focus on the immediate needs of the business and push superannuation to the bottom of the to-do list, telling yourself you'll get to it 'next year.'

Too many small business owners consider the business itself to be their superannuation. This can be a high-risk strategy that compromises both wealth creation and your future lifestyle.

Superannuation is an especially powerful tool for the self-employed for several key reasons.

Tax advantages

The tax-advantaged nature of superannuation is a benefit everyone can access, but it's one that self-employed people should proactively use. When you make personal deductible contributions, you reduce your taxable income and therefore your personal income tax bill.

For example, a self-employed person with business profits of $80,000 a year faces a marginal tax rate of 30% (plus the 2% Medicare levy). If they decide to contribute $10,000 into super, they can claim that $10,000 as a tax deduction. This reduces their after-tax income by just $6,800 (the $10,000 contribution minus the $3,200 tax they would have otherwise paid on it).

Within the super fund, the $10,000 contribution is taxed at only 15% ($1,500), leaving an $8,500 asset in their super account. In effect, the business owner has given up $6,800 in immediate spending power to acquire an asset worth $8,500. That’s the equivalent of an immediate investment return of 25% on their money. The higher your personal income, the greater this benefit becomes.

Asset protection

For a business owner, benefits held within a superannuation fund are generally well-protected. In the unfortunate event that the business fails and you are pursued by creditors, the money inside your super fund is typically beyond their reach.

There are rules to prevent this from being misused. A court can 'claw back' contributions made with the specific intention of defeating creditors. This is why making regular, consistent contributions over time is a much better strategy than making a single large contribution just before the business gets into trouble.

Complementarity

Your superannuation can be managed in a way that complements your business strategy. One of the most effective ways to do this is by using a self-managed superannuation fund (SMSF) to purchase the commercial property from which your business operates.

Generally, you cannot use super assets for your own personal benefit before retirement. However, the rules do allow an SMSF to own a business property and lease it to a related party (like your business), as long as it is done on commercial, arm's-length terms.

This strategy offers several benefits:

• Your business pays rent to your super fund, effectively turning a business expense into a retirement saving.
• You gain security of tenure by being your own landlord.
• The rent paid by the business is a tax-deductible expense to the business, while it is taxed at the low super rate of just 15% inside the fund.
• It provides another way to channel money into the super system, separate from the standard contribution caps.

Automating the process

Human nature often leads us to procrastinate, especially with long-term goals. Many business owners find themselves in late June, scrambling to find spare cash to make a super contribution before the 30 June deadline. This is not the most effective approach.

A much better way is to automate the process. Set up a recurring monthly or quarterly transfer from your business account to your super fund. By contributing a smaller amount regularly, you can ‘set and forget’ your super contributions, ensuring you are consistently building your retirement wealth without the last-minute stress.

Automating your savings is far better than the alternative: simply forgetting! If you think this would suit you, get in touch and we can show you how to set it up.

Congratulations! By reading this guide, you’ve taken a significant step towards understanding one of the most important financial assets you will ever own. We've covered a lot of ground, from the basics of how money gets into your super account to the strategies for how it's invested and, eventually, how you can use it to fund your retirement.

If there is one key message to take away, it is this: superannuation is your money, and your engagement with it today will have a profound impact on your lifestyle in the future.

The journey of your super

We've seen that super is more than just a savings account; it's a powerful, tax-effective structure designed to help you build wealth. The journey begins with contributions—the steady flow of your employer's Superannuation Guarantee, topped up by your own smart decisions around salary sacrifice, personal contributions, and special measures like the downsizer scheme. Understanding the caps and rules is the first step to maximising what you put in.

Once inside the fund, your money is invested. We’ve discussed how choosing an investment profile that matches your age and goals is vital. A growth strategy over the long term can harness the power of compounding, while a more conservative approach can protect your capital as you near retirement. Regularly reviewing your fund's performance and fees, and consolidating multiple accounts, are simple actions that can save you tens of thousands of dollars over your lifetime.

We also explored the critical role of insurance. Super offers a cost-effective way to secure essential Death and TPD cover for your family, but it's vital to ensure it's the right cover for you and to be cautious about holding income protection inside your fund.

Finally, we looked at how you can access your money. The transition from working life to retirement is made possible by turning your super balance into a tax-free income stream—a strategy that represents the culmination of decades of saving and investing.

What's your next step?

This guide has given you the foundational knowledge, but the next step is about action. We encourage you to:

1. Log in to your super fund's website. Check your current balance, see how it's invested, and review the fees you are paying.
2. Check your insurance cover. Do you have it? Is it enough? Is it the right type for your needs?
3. Think about your contributions. Could you contribute a little more through salary sacrifice? Are you eligible to make use of carry-forward or downsizer rules?

Superannuation can seem complex, but its core principles are straightforward. Small, informed decisions made consistently over time are what build a comfortable and secure retirement.

While we hope this ebook has been helpful, it provides general information only. Your situation is unique. For advice tailored to your personal circumstances and financial goals, there is no substitute for a discussion with a professional.

If you’re ready to take the next step and create a clear plan for your future, please don't hesitate to contact us.