We’re always paying attention to our wages: how much comes into our bank account and when, making sure we’re getting decent pay increases each year, and saving up where we can.
But it’s rare we give our superannuation the same attention. It’s time to change that.
Retirement may seem a long way down the track but the money you need to have for a decent retirement cannot be accumulated overnight. It pays – literally – to get on top of your super sooner rather than later.
So, let’s get this show on the road. We’ve made this checklist to sort out your super in four steps. Let’s start with the basics, shall we?
1. Avoid doubling up on fees
It is surprisingly easy to accumulate more than one superannuation account – sometimes even with the same super fund.
Often this happens when you start a new job and instead of providing your existing account details, you sign up for a new account as part of the paperwork you do when starting a new role.
But multiple accounts will only drag you down. If you have more than one account, that often means you’re paying unnecessary fees. (Some people, though, have good reasons to have more than one account including for insurance purposes or to meet some financial goal.)
A good way of consolidating your super is to go to your industry super funds’ website and get them to do it for you. You can also check through your MyGov to see if there’s more than one account in your name and under your tax file number.
2. Learn about default industry super funds
A big part of why unions fought for superannuation is to ensure that superannuation funds, and the services they provide, are suited to your industry. If you have joined a new workplace, there’s a good chance that your default fund is an industry super fund.
Being a member of your industry super fund is a good way to get ahead. Industry super over the long term have performed better, have had lower fees, and have insurance appropriate to your industry.
Unlike for-profit, bank-owned super funds which are run to benefit shareholders, industry super funds’ sole purpose is to deliver all profits to members – find out which super fund suits you and your industry.
Being a member of an industry super fund which services your industry can mean more appropriate insurance – especially for workers in dangerous industries, services which are more relevant to you at hours you work, and a fund which is governed by your union representatives fighting for you and your co-workers’ goals in fees, investments, insurance and advocacy.
Being part of an industry fund is also important to ensure your super is paid on time and in full. Unlike for-profit super funds, industry super funds are in your corner with you and your union when it comes to getting your unpaid super back.
Most industry super funds work with Industry Fund Services to proactively identify and recover unpaid super from bosses who haven’t paid or if the employer goes through insolvency. Just another reason to be in an industry super fund.
3. Bargain for better super
A big part of being in a union and getting a better deal for workers is negotiating an enterprise agreement and bargaining for super. Workers bargain not only for better deal, but to ensure that super is paid above the minimum, on time, in full, and on all wages.
By default, many workers miss out on super, but with your union you can fight for a better deal in super and to make sure that your super is contributed to an industry super fund.
Every day workers and their unions are bargaining for a better deal for their retirement by winning:
- Superannuation on parental leave
- Superannuation on all wages, not just on ordinary time earnings
- Super paid at a higher rate than the minimum
- Insurance subsidies for high-risk workers, and
- Superannuation paid into their industry super fund
If you want a better retirement, you can take steps with your union now to get a better share of the wealth you produce directed towards your life after work.
4. Decide if you want to contribute to your super via salary sacrifice
Thanks to the Superannuation Guarantee, all employers in Australia must provide contributions to your super that are minimum 10.5 per cent of your ordinary earnings. These contributions are paid on top of your regular wages and will increase to 12 per cent over the next three years.
If you want to make extra contributions to your super beyond what your employer provides, you can choose to salary sacrifice.
Salary sacrifice is when a certain amount from your income and transferred regularly as a pre-tax contribution into your superannuation.
These contributions are taxed at a lower rate of 15 per cent (provided you contribute less than $27,500 per year).
Your employer is the one who makes the transfer before you’re paid. So not only does salary sacrificing mean your super account is bolstered but it also reduces your taxable income.
You will need to check with your employer if salary sacrifice is something they offer as not all do. If your employer does not offer salary sacrificed super, you can contribute after tax and claim the tax deduction at tax time. This is more complicated and you may need help to do so.
But for workers on low wages, salary sacrifice may simply not be an affordable option. Contributing extra to super isn’t viable for everyone, and you may want to seek advice before doing so.
How union members are pushing for fair retirement
Lower paid workers are automatically on the back foot when it comes to super. There are also other inequalities that come into play that see women and Indigenous workers retire into poverty.
This unfairness is exactly why union members continue to campaign for stronger superannuation laws.
In 2022, we saw an increase to the superannuation guarantee from 10 per cent to 10.5 per cent as well as the abolition of the $450 threshold.
Workers who were earning less than $450 per month with a single employer were not entitled to the super guarantee. Removal of the threshold as of July 2022 was only good news for low income earners and working women in particular.
We have already achieved regular increases to the superannuation guarantee so that it reaches 15 per cent by 2025. But unions are still working towards having that delay scrapped so we can see the 15 per cent guarantee implemented as soon as possible.
The results we have seen in 2022 have come about due to thirty years’ worth of collective action from union members.
Being a union member isn’t just about improving the quality of your working life – it means improving the quality of your retirement too.
Disclaimer
The information set out on this website is of a general nature only and should not be taken as a complete or definitive statement about superannuation, superannuation funds and other service providers listed therein. You should not make decisions concerning your superannuation arrangements solely based on the information contained on this website.
The information on this website has been prepared without taking into account your objectives, financial situation or needs.
Before acting on that information, you should consider its appropriateness having regard to your objectives, financial situation and needs. You are responsible for your own investment decisions and should obtain individual tailored financial advice whenever necessary.
Cover photo credit: Alexander Bickov on Unsplash
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Why 2023 is the year to sort out your superannuation