Superannuation

How you could be contributing more to super
Superannuation Advice
Government Co-contribution
Changes in the Co-contribution rates
DIY Superannuation
Comparing DIY superannuation funds
What you can invest in
How can I register?
Accessing your superannuation savings
Transition to Retirement pension

How you could be contributing more to super

Building your superannuation is becoming more and more important as retirement and lifestyle expectations change, and as access to the Government age pension becomes more limited.

Fortunately, there are also more ways than ever to benefit from super, even before your retire. Our Financial Planning team at Pigot Miller Wilson will be able to walk you through the right options and opportunities for your retirement and goals.

Super contributions fall into two groups:

Concessional contributions are before-tax contributions paid by employers; this includes superannuation guarantee and salary sacrifice contributions, as well as personal concessional contributions made by those who are eligible.
Non-concessional contributions are personal, after-tax contributions.

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Superannuation advice

Regardless of whether you are young or old, you must consider your superannuation strategy now for the future.

In fact, the younger you are the easier it is to grow your nest egg. You will be thanking yourself in the future for your financial wisdom!

Our team at Pigot Miller Wilson can help you:

Determine how much super you will need in retirement.
Choose a superannuation fund that suits your risk profile and retirement goals.
Choose a super strategy and discuss ways you can boost your super contributions tax-effectively via salary sacrificing etc

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Government Co-Contribution

A Government co-contribution is payable in respect of a person for an income year if:

The person makes one or more personal non-concessional superannuation contributions during the income year;
The person has received at least 10% of their total income from carrying on a business, eligible employment¹ or a combination of both;
The person’s assessable income, reportable employer super contributions and reportable fringe benefits for the income year is less than $61,920;
An income tax return for the person for the income year is lodged;
The person is less than 71 years old at the end of the income year and
The person does not hold an eligible temporary resident visa at any time during the income year.

¹ Eligible employment means the holding of any office or appointment; or the performance of any functions or duties; or the engaging in of any work; or the doing of any acts or things; that results in the person being treated as an employee.

² Assessable Income for the purposes of the co-contribution is assessable income, reportable employer super contributions and reportable fringe benefits, less any deductions applicable as a result of carrying on a business.

You will receive the full $1,000 of co-contribution if you have made a personal non-concessional contribution and your assessable income, reportable employer contributions and reportable fringe benefits is $31,920 or less. This amount will decrease by 3.333 cents for every dollar of income over $31,920 up to $61,920, at which point the co-contribution phases out completely.

When your income is more than $31,920 but less than $61,920 in a year of income, the co-contribution will be adjusted based on income and the level of contribution.

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Changes in the co-contribution rates

As part of the 2009 Federal Budget the Government announced that it would temporarily reduce the super co-contribution until 2014/2015. The maximum co-contribution will be:

100% or $1,000 for 2009/10, 2010/11 and 2011/12 financial years
125% or $1,250 for 2012/13 and 2013/14 financial years
150% or $1,500 from the 2014/15 financial year

Click here for the ATO’s co-contribution calculator.

The co-contribution may also be reduced if your personal non-concessional contributions during the year are less than $1,000.

TIP
Don’t invest the $1,000 into super if you are not required, i.e. if you are going to receive a reduced co-contribution. For example, if your income is $38,000 you are entitled to a co-contribution of $797, you only need to contribute $797 to obtain the full benefit of $797.

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DIY superannuation

A DIY (Do-It-Yourself) superannuation fund is an individual, family or small business based superannuation fund that consists of less than five members.

Members of these funds are given a higher degree of control over the funds invested.

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Comparing DIY superannuation funds

When looking at which super fund to go with it is always important to compare the advantages and disadvantages. Below is a table that summarises this for you.

Advantages	Disadvantages
Control over your investments Tax concessions Cost effective Estate planning opportunities Investment flexibility More retirement planning options	High cost Time consuming Riskier Compliance

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What you can invest in

With Pigot Miller Wilson’s DIY superannuation fund options, you can invest in various investments, which include but are not limited to:

ASX listed securities
Managed funds
ASX fixed interest securities
Securitised assets
Real estate

However, what you can invest in is determined by your investment strategy. Your investment strategy is set when you establish your superannuation fund and must be adhered to throughout the life of the fund. There are six main investment strategies to choose from:

Capital Secure – suitable for investors seeking capital security. This option provides a secure return with very low risk of capital loss.
Conservative – suitable for investors seeking a higher return than cash who are prepared to accept modest risk of capital loss.
Moderate – suitable for investors with a medium investment timeframe who are willing to accept a moderate risk of capital loss with a moderate level of growth.
Balanced – suitable for investors with a longer time frame who are prepared to accept moderate/high risk of capital loss with along investment timeframe.
Growth-oriented – suitable for investors with a medium to long-term time frame who are willing to accept moderate/high risk of capital loss but with a higher return.
High Growth – suitable for investors willing to accept high risk of capital loss in the short-term with higher returns over the long-term.

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How can I register?

If you would like more information on DIY Super Options – contact our Financial Planning Team.

They will take care of the entire registration process for you and explain everything you need to know.

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Accessing your superannuation savings

Once you have met a condition of release, you can withdraw your superannuation as a lump sum, or commence a superannuation pension.

Lump Sums
In most cases, a lump sum withdrawal from super after age 60 will be tax-free. If you withdraw a lump sum prior to this age, some tax may apply. You should always think carefully about the need to make lump sum withdrawals, as each one will reduce the super balance that you are relying on to fund your retirement.

Pensions
A superannuation pension is just like a normal super fund, with the requirement that you take at least a minimum payment in each financial year. This minimum payment starts at 4% of your account balance when you are under 65, and gradually increases as you get older. In most cases, all pension payments will be tax-free after you reach age 60. If you are under 60, some tax may apply.

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Transition to Retirement pension

Once you have reached your preservation age (currently 55), you are able to commence a Transition to Retirement pension, even if you don’t stop working. There are 2 main reasons why you might want to commence this type of pension:

To reduce your working hours and supplement your income with pension payments from a Transition to Retirement pension, or
Continue working, salary sacrifice a significant amount of your salary into superannuation, and live off income from your Transition to Retirement pension (this strategy can provide a powerful increase in your superannuation balance by the time you retire). The main restriction on a Transition to Retirement pension is that a maximum payment of 10% of your account balance per financial year applies. You are also unable to make lump sum withdrawals. These restrictions generally apply until you retire or reach age 65.

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