The things they didn’t teach you in school

Super News

They probably didn’t teach you much about super in school. Which is a missed opportunity, because understanding how to make your super work for you early in your career can really help to secure your financial peace of mind.

When you were at school or first started work, you were probably given a general definition of superannuation. It’s money your employer has to pay on your behalf now, that you can’t access until you retire. And it’s there to make sure you’ll have money to live on when you retire. Of course there’s the Government Age Pension, but that may not be enough to live on comfortably.
However, it’s worth taking some time now to learn a little more about it. Because the more you know about your super, the more you can use the way it works to your advantage. Possibly the most important thing to know early in your career, is that the more you contribute when you’re younger, the more easily you can grow your funds over the years.

One simple thing you can do now

For a start, consider contributing to your ESSSuper Defined Benefit Fund (ESSS DB) at the maximum rate to maximise the amount of super will receive at retirement. There are specific rules about how your super benefit is calculated for your ESSS DB Fund based on:
  • your contribution rate, that is the percentage of your salary you contribute
  • how long you are a member of the fund; and
  • your final average salary when you retire.
It simply means that the more years you contribute at the maximum rate, the quicker you’ll reach your maximum benefit multiple.1

Taking parental leave and your super

If you know you’re going to start a family one day and take parental leave, it doesn’t have to impact negatively on your super. Your paid parental leave is regarded as ‘normal service’. So during this time, your super benefit will continue to accrue in line with your chosen contribution rate.

What about working part-time?

For many members caring for a young family means working part-time for an extended period. When you work part-time, even though your contribution rate may remain unchanged, the amount you contribute will be less, in proportion with the time fraction you work. Therefore your benefit multiple will increase at a slower rate.

What is ‘salary sacrifice’ and will it work for you?

Salary sacrifice involves giving up pre tax pay and putting it into super instead.. The portion of your before-tax salary that you ‘sacrifice’ into super gets taxed at 15%. It’s only effective if you earn more than $40,000 p.a. That’s because you are on a higher marginal tax rate. So by salary sacrificing your contributions, you may be able to save tax and increase your super at the same time.

Don’t waste your super on unnecessary fees

If you’ve worked in other jobs and had other super funds prior to joining ESSSuper, you may have some ‘lost super’. It’s a good idea to check how much life insurance you have with ESSSuper, and think about how much you need at this stage of your life. If you do have other funds, a simple solution is to consolidate them into one fund.2 You can quickly find any lost super you have and consolidate it by using the super search tool available through Members Online.

Where can you learn more about your super?

As an ESSSuper member you have complementary access to experienced Member Education Consultants, who understand the type of work you do, and are the experts in your fund. They also run regular webinars on a wide range of super topics. You can find a list of upcoming webinars here.

1. How your ESSS DB Fund works
2. You should check any relevant exit fees you may incur, or any insurance arrangements that may be forfeited, or any other effects this transfer may have on your benefits, before rolling your money into our fund.

The information contained in this article is of a general nature only. It should not be considered as a substitute for reading ESSSuper’s Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at www.esssuper.com.au or by calling 1300 650 161.

Have you registered for Members Online?

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Plan your journey to retirement

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IMPORTANT

Beneficiaries

Super is an asset, so it’s worth thinking about what happens to it if you should pass away.

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Do something super for your spouse.

As an ESSSuper member, your spouse or de facto partner is eligible to open an ESSSuper Accumulation Plan account.

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