Do you ever feel like there’s too much technical language that goes along with superannuation? You’re not alone.
At Club Super we want to help cut through the confusion. It’s important to understand what all this super stuff means because apart from the family home, superannuation is probably the largest asset many Australians will own.
These terms are commonly used in the Club Super statement you’ve just received.
Benefit: The amount of money saved in your retirement account which is accessible after meeting certain Government imposed conditions such as retirement.
Contribution: Money put into a super fund by you or your employer.
SG (superannuation guarantee): This is the amount of money employers must contribute to employees’ super funds. The minimum is currently 9.5%, increasing to 10% from July 2021 until it reaches 12% in 2025/26. These contributions are classed as Concessional.
Concessional Contribution: The Government provides a range of incentives for people to save for their retirement through superannuation. For this reason, certain types of contributions receive a lower tax rate. These are called concessional contributions and are taxed at 15%. They include employer SG contributions, salary sacrifice contributions and self employed contributions for which a deduction is claimed.
Non-concessional Contribution: Money you put into your super account yourself that you have already paid tax on. For this reason, non-concessional contributions are not taxed by Club Super when received. They include personal contributions and spouse contributions. These are also known as Personal Contributions.
Salary Sacrifice: Salary Sacrifice is an arrangement whereby you put a certain amount of your pre-tax (gross) salary into superannuation. This reduces your take-home pay but may have tax advantages.
Spouse Contributions: Spouse Contributions are amounts of money you contribute to your spouse’s superannuation account, or the other way around. These contributions are classed as non-concessional and the contributing spouse may be entitled to a maximum tax offset of up to $540 each financial year if certain criterion is met.
Contributions Cap: The Government has imposed limits on the amount of money that can be put into a superannuation fund each financial year. Contributions in excess of these limits may be subject to extra tax.
Preservation Age: The Government prescribed age at which you are able to access your super money, provided you meet certain other criteria.
For more information about contributions and caps, please Club Super Additional Information - How super works or call 1300 369 330.