Superannuation is a government legislated program designed to enable every worker to save and accumulate a percentage of their earnings to provide for their retirement.
Australia's superannuation system is acknowledged as one of the most comprehensive in the world, with its mandatory employer contributions and significant flexibility.
With Australians living longer, superannuation is becoming increasingly important. Historically, retirement generally only lasted 5-10 years, improvements in general health and modern medical practices means that for many of us retirement may last between 20 to 30 years or longer.
Your choice of super funds Broadly, there are 7 different types of super funds to choose from, including:
Each type of super fund listed above has different features and benefits, and can be simple or complex, depending on your needs. ALT Super + is a specialist in superannuation, and provides specific expertise in Self-Managed Super Funds (SMSFs).
A Self-Managed Super Fund (SMSF) is a popular choice for many working and retired Australians. It is now the largest sector of the superannuation industry with over 500,000 funds (June 2013) and $520 billion in net assets (Sept 2013).
An SMSF provides one of the most tax effective and flexible ways to grow wealth for retirement. However, managing your own superannuation takes knowledge, skill, time, and money and it is important that you satisfy yourself that you are willing and able to invest the necessary time and energy to successfully manage an SMSF.
How do SMSFs work? All superannuation funds are managed and controlled by trustees who make the decisions about where and how to invest the funds of members. It is the duty of the trustees to act at all times in the best interests of members of the fund.
An SMSF is a type of trust with specific rules detailed in a trust deed, and also through various forms of legislation. Membership of an SMSF is limited to 4 or less members. All members must also act as Trustees of the trust and who have responsibility for running the fund on a day to day basis.
Trustees are either individuals, or are directors of a company that is Trustee (i.e. a Corporate Trustee). SMSFs are regulated by the Australian Taxation Office. Although the Trustees are ultimately responsible for the fund, Paisley Robertson can provide strategy advice and expertise to ensure that your fund is administered correctly and efficiently.
As with other superannuation funds, the trustees must consider how to invest the fund's assets (according to an investment strategy specifically prepared for the individual fund) and whether life insurance cover is required. This strategy must be put in place when the fund commences and must be reviewed regularly.
All investments made by the trustees are to be made in accordance with the strategy and must also consider any legal investment restrictions. These restrictions are designed to protect members' funds by ensuring that the sole purpose of the fund is to build wealth for retirement and to prevent over exposure to risk.
^ Can be offset by using a professional adviser, such as your accountant.
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