Super Basics explained

Hi, I'm Emma McCosh and I'm here to talk about superannuation basics; equipping you today so you're ready for tomorrow. As a representative I'm allowed to provide you with general financial product advice. This doesn't take into account your needs and circumstances. Please refer to the PDS, FSG and TMD before you make any decisions regarding your super.

What is superannuation? Superannuation is a form of trust that's there for your retirement savings. Generally, your employer will be paying into it if you're working but you can add extra. Superannuation is your money, as a member of the fund you are a beneficiary, and you get to decide how to invest your money, what insurance you'd like to have on your account, and who would get your money in the case that something happens to you.

Superannuation is part of the government's three-pillar policy about how we fund retirement in Australia. The three pillars in the policy are the Age Pension, the superannuation guarantee, and additional savings if you choose to do so.

The Age Pension is the oldest part of the system and still funds a lot of people's retirement in Australia. You can see it's not a lot of money to be living off if you don't have anything else, but it does cost a lot of money to Australian taxpayers, so back in the late 80s it was recognised that this was a bit of a problem and the Superannuation Guarantee was introduced.

It started in 1992 at 3% of salaries and now most working Australians should be getting a Super Guarantee of 11.5% of their salaries from their employers. This will be going up to 12% in 2025.

If you'd like to save extra money to super you can do so, you can also save outside of super, and if you do choose to put more into super there can be some really good tax savings to do so.

We are a profit to member industry super fund. We are here to benefit our members, we don't pay profits to shareholders. We have a history of strong investment performance, we have competitive fees, and we offer good value insurance.

There are two general ways to contribute extra money to superannuation, pre-tax or concessional contributions, and post-tax or non-concessional contributions. Pre-tax contributions can come straight out of your salary via a system that we usually refer to as salary sacrificing. This reduces your taxable income and instead of paying your marginal tax rate on that amount you just pay the contributions tax which is usually 15%.

 If you make post tax contributions to super, this is where you just put savings from your bank account and BPay it straight into the fund. In some cases you may be entitled to a government co-contribution. If you're interested in contributing more to your super please get in contact with us.

Here you can see the different marginal tax rates for income earners in Australia versus the effective tax rate on super funds and you can see that once you're a full-time worker earning above about $45,000 per annum then you should be saving money by putting extra away on a concessional basis. Please note that this doesn't take into account any tax deductions.

Why consolidate? Generally we recommend people just have one super fund so that they can keep track of where their super is. You can also save money by not having multiple fees on multiple accounts and not paying for multiple amounts of insurance.  

Consolidating your super can make a big difference over the long term and we do encourage people to check whether they've got any lost super via the ATO. If you'd like to consolidate super funds you can log into your account online, you can call us on the helpline, you can go into your MyGov account, or you can follow this link to our super match service to help you find any loss super you might have.

There are a few things to consider before consolidating super accounts. Please check on any insurance you've got before you roll out of an account because that insurance cover will be closed with the account. Please check any fees and consider any impacts on your personal or employer super contributions before you roll out.

We've got lots of different investment options for you to choose from. The way investment options work in the super fund is that it's based on units and unit prices so you can see here we've got low risk options like cash and our diversified fixed interest option. We've got diversified options where you've got the two different colours on the circles there so they're investing in lots of different types of asset classes and then you've got up the top, the more aggressive type of growth investment options, things like shares and property.

With the different investment options you can have one or more, you can change them online, or you can call up the help line to help you make a choice. If you don't make a choice you'll be put into our MySuper investment option. That's the default and this option is invested 70% in more aggressive type of assets and 30% quite conservative types of assets.

For this option we really do encourage people to have a good seven years plus to be invested in. It's not a short-term kind of a thing, if you do think you're going to be pulling your money out in the short term we'd be encouraging you to look at more conservative assets. But if you're younger, if you're in your 20s 30s 40s then you've got time to take more risk and you might want to choose one of our more aggressive Diversified Portfolios.

One of the benefits of our super fund is that we offer life insurances. We have death cover, total and permanent disability cover, and income protection. Depending on how you join the fund and who your employer is you may be set up with default automatic cover. Please check what cover you've got and if you'd like to increase or decrease your cover we can help you with doing that and we can also help you with making a decision. We have insurance calculators and we have financial planners that can help you decide what's right for you.

The way Insurance works, the death cover is exactly the same as life insurance. If you pass away that amount is paid as a lump sum along with your accumulated benefit to your chosen beneficiaries.

TPD is total and permanent disability cover. This is generally a lump sum that's paid to you in the situation where you are unlikely to be able to work again. Income protection is a temporary benefit. You can choose either two or five years of cover and this is a percentage of your salary that can cover you if you're unable to work and if you don't have any sick leave left.  Please do check your insurance cover regularly and get in contact with us if you'd like to change anything.

MetLife is our insurer. MetLife offers our members an end-to-end health solutions. They cover mental, physical, social and financial health as well as work factors. This service is designed to cover the five stages of the health Journey that you can see in the circle on the left. If you'd like more information on how to access this service please go to our website.

What to do next when you're ready? Please contact us at our helpline via email or via our website. On our website you can read our fact sheets and access our handy calculators

Thank you and good luck with your retirement