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Superannuation

Superannuation, also known simply as  ‘super’ or a ‘superfund’, is a government regulated savings scheme. It’s basically a type of forced saving that you can’t access until after you’ve retired from work at a certain retirement age unless in exceptional circumstances – see Early Release below.

How it works

Employers are legally required to pay part of your salary directly to your nominated superfund account in lieu of giving it as a wage. By saving and growing over many years  it should create  a ‘nest egg’ of money to help you live in retirement. The money becomes available after a certain age (called the “preservation Age’) if you have retired from work. The preservation age varies from 55 to 60 years, depending on your birthdate.

Money and investments held in Superannuation are generally taxed less than investments held outside a superfund. Money held in a super fund is protected from creditors, and judgement debts

You should receive a statement each year from your superfund to show your account balance.

Most superfunds offer optional insurance cover to pay you if you are injured or disabled and unable to work as well as a death benefit for your nominated beneficiary.

If you have several different superfunds, you should consider consolidating them into one fund to save you costs, fees and paperwork. Speak to your superfund or a Financial Counsellor for more information.

Superfunds charge fees to manage your accounts. Some non-profit funds offer a low-fee service aiming to improve your super earnings. It can pay to shop around. You are entitled to choose your own superfund provided it is regulated and approved by government.

Superannuation – Early release

In very limited cases you may be able to apply to receive some of your Superannuation funds early,or before your ‘preservation Age’.   The Super Fund administrators decide whether to approve early release, limited to the following situations:

Compassionate grounds:

  • To pay Medical, disability or funeral expenses
  • To pay loan arrears if your mortgaged home is at risk of being sold by the bank
  • If you have a terminal illness

Severe Financial Hardship Grounds

  • To pay immediate living expenses, up to $10,000 per year (after having been on Centrelink allowances for at least 26 weeks)

Need to Know:

Taking money out early will reduce the amount of savings you have at retirement.

Tax may be payable on money taken early from super, and may impact any Government Benefits you receive

Money held in super accounts is safe from creditors, debt collectors.  Money you take out of super is no longer protected from creditors.