Changes to super contributions as of today
WELCOME to a new financial year. There have been quite a few changes in the financial services space, but a significant one is the increase in compulsory superannuation from 9% to 9.25 percent.
While it's only a small amount anybody who is on a salary sacrifice arrangement should examine their package and make sure the extra .25% is being paid by the employer and not coming out on the package.
For example, you might be on a salary of $80,000 a year and your employer is required to pay 9.25% ($7400) into super. If you could afford it, and you are happy to lose access to the money until your preservation age, you might ask your employer to reduce your salary to $70,000 and make extra contributions of $10,000 a year to superannuation. This is called salary sacrifice.
Unfortunately, there are unscrupulous employers who will do this and then tell you that they are no longer have to put the 9.25% into super as there is already $10,000 going in.
The way around this is to make sure that any arrangements to salary sacrifice are clearly arranged in writing with your employer before the extra contributions start.
This is also the perfect time to look at the type of assets you hold inside super and ensure they meet the goals and their risk profile. If you are relatively young, you are unable to access your superannuation until aged 60 at the earliest, and even then rising life expectancies mean you will probably live to 95. If you are in the situation you should be taking advice about having the bulk of your super in growth assets.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: firstname.lastname@example.org.