Super Funds

Superannuation is a long term savings arrangement to fund for retirement. Most Australian employees are entitled to receive from their employer a superannuation guarantee of an additional 9% of their gross wages paid into their nominated super fund. Subject to limits and regulations, investors are also able to make personal deducted and undeducted contributions into their super fund.

Superannuation is considered one of the best ways for Australians to accumulate wealth and save for retirement, largely due to the tax advantages available over other forms of investment. Investment earnings on money held in super funds are taxed at a maximum rate of 15%, allowing money to grow faster than investments that are taxed at a higher rate. Super can then normally be accessed tax free at age 60 or over.

Employer contributions - either compulsory employer contributions or additional salary sacrafice contributions
Personal contributions - made by employed or self-employed individuals on their own behalf
Government contributions - a co-contribution made by the government where an individual meets set requirements
Spouse contributions - contributions made by one spouse on behalf of the other, including splitting

Consolidating super refers to moving all of an individual's superannuation into one super fund. Employees often find that the different companies they have worked for have paid superannuation guarantee contributions into different super funds. This leads to multiple accounts, and in many cases lost super when the employee doesn't know where a company they worked for 10 years ago paid superannuation contributions to.

Not only does consolidating super into one location make it easier for investors to monitor performance and keep track of their superannuation. but it can also save on total fees paid. Consolidating super funds into a single account is generally a simple process and only requires completing rollover transfer authority forms which should be obtained from the fund that you would like to move all the other funds into. If you believe that you may have lost super, the Australian Taxation Office has designed SuperSeeker which can be accessed at the ATO website or over the phone.

Much like with managed funds, most retail super funds have a contribution fee (or entry fee) of 4% to 5% that is deducted from all contributions and rollovers. This contribution fee is paid to the financial adviser listed on the super fund, or where there is no adviser listed retained by the fund manager. Paying an entry fee when contributions are made will impact an investor's final superannuation balance, and this impact that will be compounded over the life of the super fund. Investors should search for a direct investment broker who rebates this entry fee in order to maximise the super contributions they make.