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Super and You

Okay, so in the second part of this series, we are going to talk about how superannuation affects you and some of the terms that you’ll hear about.

The most common one you’ll hear is super guarantee.

Super guarantee is the compulsory super that your employer has to pay on your wages.

But it’s important for you to know what part of those wages your employer has to pay superannuation on – because it may not be the entire amount.

I’ve got a free downloadable check sheet on the things that super has to be paid on and the parts of your wages that superannuation doesn’t have to be paid on. And that’s important of course, so that you can make sure that you are being paid the super that you should be paid.

Most employers do the right thing, but unfortunately there are some employers that don’t pay super on time or don’t pay the right amount. The amount of the super guarantee currently is 10.5% of your eligible wages, and that’s going up half a percent every year for the next couple of years until it reaches 12%.

The super guarantee needs to be paid by your employer into your fund at least every quarter. Your fund should have received this money by 28 days after the quarter ends. Quarter ends are March, June, September, and December. So, your money should be in your fund by the 28th of April, 28th of July, 28th of October and 28th of January.

If it’s not, chat to your employer, because they will need to complete what we call a super guarantee charge statement to the ATO, to tell the Tax Office that they haven’t paid that superannuation on time. Your employer will have penalties to pay and interest that you have lost so that you are not disadvantaged by not having your money invested in your superannuation fund when it should have been.

You should always check:

  • whether you’ve been paid on time?
  • whether you’ve been paid correctly?

The next thing that I want to talk about here is whether or not your money in superannuation is invested in the best possible way for you? This is what we call your risk profile.

A risk profile is your tolerance to your investment strategy.

So, we have conservative investments and growth investments.

Conservative (or defensive) investments don’t experience the same ups and downs of the market as growth investments so are considered lower risk. They tend to be cash or fixed interest investments.

And then we have what we call Growth Investments. These are things like shares or other investments where there can be a lot of movement. They are higher risk but offer a higher potential return than defensive investments.

Your risk tolerance is how comfortable you are with these investments – or what I like to call the ‘sleep test’.

The sleep test is whether or not you can put your head on the pillow at night and be free of worry about your super/investments. If that’s you, you are in the right profile.

But of course, your superannuation fund doesn’t know what your risk profile is. Unless you tell them.

Please don’t bury your head in the sand. Do a risk profile assessment to work out what your risk tolerance is. If you are high growth, then you will have lots of investments in shares. If you are a conservative investor, then you’ll have lots of investments in cash where there’s not as many fluctuations.

It’s important that you know what your tolerance is so that you can tell your superannuation fund.

If you’re not sure what your risk profile is, get in touch with us here at 123 Financial Group. We have a great questionnaire which will help to determine what your risk profile is, so that you can make sure that your superannuation is invested correctly.

If you are a high-risk profile person who is invested in a conservative profile, you are potentially missing out on growth in your investment, which can really impact your savings for retirement in the long run.

On the other hand, maybe you are getting close to retirement, but still invested in a high-risk profile? Some people choose to be more conservative with their investments as they approach retirement to reduce the risk of their balance falling.

It is so, so important that you know what your risk profile is, that you check that your superannuation has been paid by your employer by the due date and that your superannuation has been paid on the correct amount of your income.

And the other thing that I want to point out to you is that from July 1, 2022, the government removed the $450 Threshold for superannuation.

This was a threshold where if you weren’t paid more than $450 in a calendar month, your employer didn’t have to pay superannuation for you.

Now that’s been removed, which is great because if you were working two low paid jobs or even several low paid jobs, then you were potentially missing out on vital superannuation funds.

And of course, so many employers now employ on a casual basis. This means that a lot of people didn’t get the superannuation that they should have under the old rules.

So please check all those things. Don’t forget to download our super check sheet to make sure you are being paid appropriately and consider your risk profile.

If you need help navigating this super stuff (it’s so important!!) reach out to us at 123 Financial Group.

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